EU legal framework, Hungarian implementation and practical obstacles to introduction

The European Union’s Pay Transparency Directive 2023/970 introduces a new approach to enforcing the principle of “equal pay for equal work.” Although this fundamental principle has long been included in both domestic and EU regulation, in practice wage differences can still be identified where justification or detection poses difficulties. The current legislative step aims to establish a framework in which equal pay can be operated in a transparent manner based on objective criteria.

In Hungary, preparation for implementation has not yet begun at the level of detailed rules; however, Member States must transpose the provisions of the Directive into national law by 7 June 2026. This means that Hungarian employers will gradually face new compliance, HR process and data protection requirements in the coming years. Despite the uncertainty, it is advisable to prepare in time, particularly where the practical introduction of pay transparency will have an impact on business decisions and employee experience.

Which laws are expected to be amended?

The Hungarian transposition may affect several closely interconnected regulatory areas:

Labour Code (Mt.)

This may include the obligation to indicate salary ranges in job advertisements, the prohibition of questions regarding previous salary, and the objective determination of remuneration and promotion criteria. Employees’ right to information regarding pay may also expand.

Rules on equal treatment

A more precise definition of the concept of “work of equal value” is expected, as well as strengthening of the reversed burden of proof and expansion of the possibility of collective enforcement of claims.

GDPR and data protection issues

The processing of salary, performance and career data is a sensitive area. Detailed guidance from the Hungarian National Authority for Data Protection and Freedom of Information (NAIH) can be expected regarding which legal basis, level of anonymisation or data storage practice may be considered appropriate, particularly where the employer prepares gender-segregated pay reports or trend analyses.

Why is preparation complex at this stage?

HR and legal experts are working simultaneously at the intersection of three sets of expectations that are not yet finalised: the Labour Code, the GDPR and equal opportunities legislation each contain frameworks that require reinterpretation in light of pay transparency.

Three defining challenges appear to be emerging:

1. The domestic detailed rules are not yet known. For example, the reporting frequency, headcount threshold, level of sanctions or method of supervisory inspections remain uncertain.
2. Uncertainty in data protection interpretation. The regular analysis of salary data carries high risk from a data protection perspective. It is difficult to draw the line between lawful data processing and excessive data collection.
3. Changing litigation risks. The numerical demonstration of pay differences and action plans linked to deviations exceeding 5% may create new types of disputes.

The current period is essentially a preparation phase: organisations are building the necessary processes, while the boundaries of obligations are not yet fully visible.

Labour Code – GDPR – equal opportunities: points of friction and expected directions

According to the new approach to pay transparency, salary data will in the future become one of the fundamental tools for enforcing equal treatment, rather than merely administrative data or a “business secret.” Employers must justify each salary offer based on the value of the position and the salary band policy.

• From a Labour Code perspective: The detailed, objective recording and communication of remuneration logic will become mandatory. The prohibition on asking about previous remuneration represents a significant change in recruitment practice.
• From a GDPR perspective: It must be ensured that the analysis of pay differences complies with the principles of data minimisation, purpose limitation and storage limitation – this will be particularly critical for analyses covering several years retrospectively.
• From an equal opportunities perspective: Due to the reversal of the burden of proof, the employer must demonstrate that identifiable differences are professionally justified.

Benchmarks, indicators and the professional role of HR

The effective functioning of pay transparency largely depends on whether the company is able to operate data-driven, consistent and transparent internal systems. Properly selected benchmarks help distinguish real risks from objective deviations.

Key professional focus areas:

• establishing salary bands based on objective job evaluation,
• structured collection of performance and career data,
• analysis of positioning within bands and relation to market median,
• preparing managers for future communication and legal expectations.

What should be highlighted for the upcoming period?

• The introduction of pay transparency represents a significant change in HR processes and organisational culture.
• Hungarian legislation will amend several areas simultaneously, resulting in complex implementation.
• Data protection requirements will play a decisive role in shaping pay reports and analyses.
• Due to the shift in the burden of proof, the justifiability of employer decisions will become particularly important.
• Preparation is also significant from a market competitiveness perspective, particularly in the areas of workforce retention and strengthening the employer brand.

Next steps of implementation

The application of pay transparency initiates a gradual change in mindset within organisations. Early preparation – establishing job evaluation systems, salary band policy and data-driven HR processes – already strengthens transparency and predictability in company operations. The next period will focus on how the expectations of the Directive can be translated into concrete HR practices: what data must be collected, what reports are required, and when joint pay assessment becomes mandatory.

In the next part of the series, we will present step by step the reporting obligations, the logic of joint pay assessment and the system-level changes necessary for establishing a salary architecture.

If you would like to prepare your organisation for pay transparency requirements, our expert team provides support from job evaluation through the establishment of salary bands to the development of reporting systems.