EU Pay Transparency Directive and its implications for employers

20 March, 2024

The EU Pay Transparency Directive came into force in June 2023 and Ireland has until June 2026 to implement the new rules.

It contains far-reaching new measures, such as gender pay-gap reporting across all EU member states, information rights for job seekers, and a right to know the pay levels for workers doing the same work or work of equal value.

Given the complexity of the proposed legislation and its implications, organisations should start preparing now to ensure a smooth transition from a legal, operational and strategic perspective.

Under the Directive, reporting and transparency will be required in a number of critical areas.

Gender pay gap reporting and equal pay

Organisations above a certain employee threshold will be required to publish gender pay gap figures externally. 

Where a pay gap of 5% or more is found in any category of worker and other criteria are not met, a joint pay assessment must also be completed.

Recruitment  

Organisations will be required to provide information on pay ranges as part of the recruitment process and will no longer be able to ask candidates about current pay to determine offers.

Pay approach and philosophy 

Employers with more than 50 workers must provide workers with information on what criteria are used to determine pay and pay progression.

Access to information on pay levels

Workers will have the right to request information on the average pay levels, broken down by sex, for categories of workers performing the same work or work of equal value. This must be provided within 2 months of request.  

Given the significance of the measures to be introduced, the first step is for organisations to identify their biggest risks and opportunities and prioritise activities. This will allow for the development of an effective change plan that will ensure readiness for the upcoming legislation and wider transparency requirements. 

Key questions are:

  • Do you have a grading structure that will allow you to report by category of worker?

  • Are you ready to share pay ranges and approach to pay progression? 

  • Are your managers prepared to address questions on compensation?

  • Do you currently monitor and understand your pay equity risks across the EU?

  • Are your systems and data able to report in line with the requirements?

Three key actions to take now

For some companies the impact of the EU Pay Transparency Directive will be significant, potentially leading to the widespread transformation of critical people policies and procedures. Successful change (including to impacted systems and processes) is therefore a multi-year programme.  

It will be critical for companies to:

  1. Understand the impact: Identify key stakeholders and gain an understanding of key risks and opportunities concerning remuneration and progression for your organisation. 
  2. Assess organisational readiness: Deep dive into the key risks and opportunities identified through interviews and document reviews. Complete a readiness assessment to prioritise actions with stakeholders.
  3. Develop an implementation plan: Develop an implementation plan to embed change based on agreed priorities, risks and opportunities around equal pay.

We are here to help you

Our team is here to help you as you work through the detail of the Directive and assess what it means for your organisation. Contact us today.

Contact us

Doone O'Doherty

Partner, PwC Ireland (Republic of)

Tel: +353 87 276 8112

Gerard McDonough

Partner, PwC Ireland (Republic of)

Tel: +353 87 224 1517

Anna Kinsella

Director, PwC Ireland (Republic of)

Tel: +353 87 967 0910

Louise Shannon

Senior Manager, PwC Ireland (Republic of)

Tel: +353 86 043 8309

Follow PwC Ireland