The European Union is stepping up its efforts to address gender-based pay inequality with the introduction of the Pay Transparency Directive.

With a legal transposition deadline set for June 7, 2026, organisations operating within EU member states must prepare now to ensure compliance with these sweeping changes.

What Is the Pay Transparency Directive?

This directive is designed to enhance transparency around pay structures and close the gender pay gap across the EU. Unlike a regulation, it requires each EU country to implement its own national laws in line with the directive, meaning there may be local variations in how it is enforced.

Importantly, the directive focuses exclusively on gender. Other protected characteristics—such as race, disability, or age—are not currently included.

Key Requirements

The directive introduces four core obligations for employers:

1. Pay transparency during recruitment: Employers must disclose salary ranges in job adverts or before interviews and cannot ask about salary history. Job titles and descriptions must be gender-neutral, and hiring processes must be non-discriminatory.
2. Pay transparency during employment: Employers must share objective criteria used to determine pay levels and progression. Employees can request information on their individual pay and the average pay for comparable roles, broken down by gender.
3. Gender pay gap reporting: Employers must report gender pay gaps to local authorities:
   • 250+ employees: annually from June 7, 2027
   • 150–249 employees: every 3 years from June 7, 2027
   • 100–149 employees: every 3 years from June 7, 2031
4. Public disclosure and accountability: Pay data must be accessible to employees, labour inspectorates, and monitoring bodies. Most of this information must also be made publicly available.

Shift in Legal Liability

The directive shifts the burden of proof to the employer. If an employee brings an equal pay claim, it is up to the company to demonstrate that no discrimination occurred. This change significantly raises the stakes for employers that fail to comply.

How Employers Should Prepare

Organisations should begin preparing immediately. A practical checklist includes:

• Assign a project team to oversee compliance.
• Map employee numbers and roles across the organisation.
• Create or refine objective pay structures.
• Begin collecting and analysing pay data by gender.
• Review employment contracts for clauses restricting pay disclosure.
• Monitor competitor pay ranges to stay market-aligned.
• Remove any salary history questions from interviews.
• Plan for the transition of existing staff into new transparent pay structures.

Conclusion

The EU Pay Transparency Directive is more than a regulatory update—it’s a call to action for employers to foster a culture of fairness and accountability. Proactive preparation now will help businesses not only avoid legal risk, but also enhance their employer brand and build greater trust among current and future employees.

With this in mind Spinnaker are setting up an EU Pay Transparency working group and will be hosting a ‘Live Information Exchange’ to address the topic in the maritime sector. Please contact us to register your interest.

Lucy McQuillan
[email protected]