The EU Pay Transparency Directive (2023/970) introduces new obligations for employers, particularly regarding the disclosure of pay gaps, salary information in job postings and employee information rights. Member States must transpose the directive by 7 June 2026. As a result, companies need to review their compensation systems, HR processes and internal policies.

This guide explains who is affected by pay transparency, what obligations companies face, and what concrete steps are required to ensure compliance.

What does pay transparency mean in practice?

• mandatory disclosure of salary ranges in job advertisements
• regular reporting on the gender pay gap
• employees’ right to request pay information
• implementation of objective and gender-neutral pay systems

What should employers know about pay transparency?

The objective of the Pay Transparency Directive is to strengthen the principle of “equal pay for equal work” and reduce gender pay gaps. Member States must transpose the Directive into national law by 7 June 2026.

For companies, pay transparency primarily introduces changes in the following areas:

• regular reporting obligations on the gender pay gap
• joint pay assessments with employee representatives in certain cases
• the development and communication of transparent salary bands
• the application of data-driven HR analytics
• more structured leadership communication around remuneration

Pay transparency therefore represents not a single HR process, but the coordinated functioning of several organisational areas.

The following summary presents the key insights from our six-part article series.

How will pay transparency be implemented in Hungary?

The Pay Transparency Directive introduces new tools to increase transparency in remuneration systems. Among other elements, the regulation requires:

• the communication of salary ranges in job advertisements or during the recruitment process
• the prohibition of questions about previous salary
• regular measurement and reporting of the gender pay gap
• joint pay assessments in certain situations

The Hungarian implementation is expected to affect several areas simultaneously, including:

• the Labour Code
• equal treatment regulations
• data protection practices

For employers, pay transparency therefore represents primarily an integrated HR and legal challenge.

Read more about the expected Hungarian implementation: 

What reporting obligations apply to companies?

One of the key elements of the Directive is the regular analysis and reporting of the gender pay gap.

Companies will be required to report, among other indicators:

• the average and median gender pay gap
• differences in variable remuneration
• the proportion of women and men across job categories

If the pay gap within a given employee category exceeds a defined threshold and cannot be explained by objective factors, the employer must conduct a joint pay assessment with employee representatives.

In practice, this means a comprehensive review of the compensation system, including:

• job requirements
• salary bands
• performance evaluation systems
• promotion practices

Read more about reporting obligations and joint pay assessment: 

How can companies prepare for pay transparency?

A key condition for implementing pay transparency is the establishment of a clear and consistent job architecture.

Its main components include:

• defined job families and career levels
• standardised job descriptions
• objective classification principles

These provide the basis for job evaluation systems and salary band structures that determine the appropriate remuneration range for each position.

In international practice, a readiness audit is increasingly used to assess how prepared an organisation is for the requirements of pay transparency.

Read more about readiness audits:

How can gender pay gaps be measured?

One of the most important elements of pay transparency is the proper analysis of pay data.

Gender pay gaps are typically analysed on two levels:

Unadjusted pay gap
The simple difference between the average pay of men and women.

Adjusted pay gap
A statistical analysis that controls for factors such as job role, experience or location.

These analyses are not only required for compliance purposes but also support leadership decision-making.

Many organisations increasingly rely on dashboards and HR analytics tools to monitor compensation structures and identify potential risk areas.

Read more about pay equity analysis:

What should be communicated to employees?

Communication is one of the most sensitive aspects of pay transparency.

The Directive introduces information obligations on three levels:

• towards authorities, through gender pay gap reporting
• towards employees, through regular information on pay equity
• on an individual level, when employees request information about their own pay and comparable roles

Effective communication helps prevent misunderstandings and maintain organisational trust.

Read more about communication requirements:

What is the role of leadership in pay transparency?

Ultimately, pay transparency becomes visible in everyday leadership conversations.

Typical employee questions often focus on:

• how salary bands work
• what determines placement within a band
• why differences exist between teams or roles

Leaders must be prepared to answer these questions consistently and based on objective criteria.

Typical leadership questions and response frameworks:

Pay transparency as an opportunity for organisational development

Although pay transparency is primarily introduced as a regulatory obligation, it can also represent a broader organisational development opportunity.

Transparent salary structures, data-driven HR decisions and consistent communication can help organisations:

• strengthen employee trust
• improve retention
• create more predictable and transparent operations

If you would like to assess how prepared your organisation is for the requirements of pay transparency, our experts can support you with readiness audits, job architecture design and compensation structure reviews.