In the first part of the series, we reviewed the framework of the EU Directive and how it affects Hungarian legislation. The next step is to present how all of this can be translated into practice: what reporting obligations need to be anticipated, when a joint pay assessment must be conducted, and how HR processes and systems can be transformed to support pay transparency.

Reporting obligation: who is concerned, from when, and what must be reported?

The Directive determines regular reporting obligations based on headcount thresholds.

Large companies: annual reporting obligation.

Medium-sized companies: mandatory reporting every three years.

Employers must make the report transparently accessible to employees and their representatives.

The report must contain at least the following elements:

• average and median pay gap broken down by gender,
• differences in supplementary and variable benefits,
• the proportion of women and men by job category,
• the distribution of employees within the pay structure.

The purpose of the report is twofold: on the one hand, it provides an accurate picture of the company’s pay structure; on the other hand, it serves as a basis for necessary interventions. For HR, this represents an opportunity to turn pay data into a management decision-support tool, rather than merely a compliance document.

Joint pay assessment: when is it mandatory and how should it be conducted?

A joint pay assessment must be initiated if, within a job category, the pay gap between genders reaches or exceeds the threshold defined in the Directive (expected to be around 5%), and the difference cannot be satisfactorily explained by objective factors.

The purpose of the process is for the employer, together with employee representatives, to examine:

• job requirements,
• salary bands and remuneration practices,
• performance evaluation and promotion logic,
• any structural or subjective distortions.

The outcome of the joint pay assessment is an action plan containing concrete, deadline-bound measures (for example, a salary adjustment programme), as well as preventive measures against future imbalances.

From an HR perspective, this is a complex compensation audit that examines remuneration, career paths, performance management and organisational decision-making in an integrated manner.

Job evaluation and salary architecture: the foundation of the system

One of the greatest practical challenges of the Directive is translating the concept of “equal work or work of equal value” to company level. This requires a clear and consistent position architecture that includes:

• job families and levels,
• areas of responsibility and decision-making authority,
• required expertise and competencies,
• levels of experience and knowledge.

Job evaluation (analytical point systems, factor-based, benchmark-based or other methods) works effectively if all positions can be compared along a few key dimensions, such as:

• professional knowledge,
• degree of responsibility,
• complexity of problem-solving,
• impact on the organisation.

This enables the company to convincingly substantiate the logic according to which two positions belong to the same salary band – or what justifies a deviation.

Salary bands, total compensation and the “fair pay” system

Pay transparency examines the entire remuneration structure. Establishing or refining a banded salary structure is an important step, especially where the company has not previously operated with a unified salary architecture.

HR must establish clear rules regarding what justifies positioning within a band. Such factors may include:

• level of experience,
• specialised expertise,
• scarce competencies,
• extent of business responsibility,
• long-term performance.

Documented and consistently applied criteria directly reduce the risk that pay differences appear as unjustified discrimination.

Reporting, data analysis and system support

Fulfilling reporting obligations requires reliable, high-quality data. This demands unified HR and payroll master data, an organised job coding system and consistent, regulated data entry processes.

The pillars of a well-functioning pay transparency system:

• standard reports (average and median pay, salary band utilisation, distribution of benefit elements),
• automated statements supporting mandatory data provision,
• dashboards suitable for analysing time trends,
• cooperation between HR, finance and BI experts.

The objective is for pay transparency data to become real-time decision-support information for management.

Data protection, anonymisation and building trust

Payroll informatics is a sensitive and strictly regulated area. The company must precisely define:

• what data it processes,
• for what purpose,
• how long it stores the data,
• who may access individual-level data.

Where possible, aggregated and anonymised data should be used. HR’s task is transparent communication: employees feel secure when they understand data processing procedures and know what safeguards protect them.

Change management: how can the process be successfully implemented?

The introduction of pay transparency represents an organisational-level transformation. Successful implementation is supported by:

• regular status assessments,
• launching pilot projects,
• a scheduled implementation plan,
• leadership education and consistent communication,
• involving employees and addressing initial concerns.

For HR, this is an opportunity to strengthen the company’s credibility, promote a fair performance culture and, in the long term, reduce turnover and disputes.

What should be monitored in the upcoming period?

• Reporting obligations require a new data structure and system logic.
• Joint pay assessment is a complex HR project based on cross-functional cooperation.
• Job evaluation and salary architecture will form the foundation of a transparent compensation system.
• Data quality is a decisive factor in successful implementation.
• Supporting organisational culture is at least as important as legal compliance.

The next phase: depth of preparation

Pay transparency becomes a functional system when the organisation approaches changes not merely as a reaction, but as forward-looking development. Reporting obligations, joint pay assessment and strengthening job structures are all elements that, in the long term, lay the foundation for more stable, transparent and predictable operations. The next step is to examine how prepared the company is for these expectations, where the most critical gaps lie, and what developments can already be initiated today.

In the next part of the series, we will present how a Readiness Audit can be conducted: which HR areas should be addressed first, how pay transparency maturity can be measured, and what development sequence ensures the lowest risk and the greatest business advantage.

Our expert team provides support in conducting readiness audits, redesigning job structures and establishing salary frameworks. Contact us if you would like to plan your company’s pay transparency journey.