– by Megan Power, Head of Change & Transformation at Insight HR
The EU Pay Transparency Directive is due to be transposed by Member States by 7th of June 2026, yet at Insight HR we continue to see many organisations underestimate how significantly it will reshape pay structures, recruitment practices, data management and, importantly, manager capability. The reality is that all organisations will need to adapt in meaningful ways, and those that have already begun preparing or who start now will be far better positioned than those waiting for Irish legislation to materialise.
While there have been calls for the Government to delay implementation due to the lack of domestic legislation, the looming deadline and, some might say, limited transparency around how the Directive will be enacted in Ireland, the Government has reiterated its commitment to full implementation. It has, however, indicated that a staged approach is likely, with full penalties not imposed on those not fully ready by the 7th of June. This should not be taken as a reason to relax, but rather as an opportunity to prepare.
What can employers expect?
Recruitment transparency is one of the most talked‑about shifts under the Directive. Employers will be required to provide job applicants with the initial pay or salary range for a role and will be prohibited from asking candidates about their prior salary history. For smaller organisations, where pay has often been influenced by market conditions or informal negotiation, this will be particularly challenging unless structured pay practices already exist.
Employees will also receive expanded information rights, including the ability to request their individual pay level and the average pay for workers performing the same work or work of equal value, broken down by gender. Pay secrecy clauses in contracts will no longer be valid. Employers with more than 50 workers must also be able to provide transparent information on the criteria used to determine pay and pay progression.
Gender pay gap reporting will apply on a phased basis depending on organisation size, with those with over 150 employees reporting first in 2027. Organisations with over 250 employees will report annually, while those with more than 150 but fewer than 249 employees will report every three years. Those with 100 to 149 employees will begin reporting in 2031, also every three years. Organisations with fewer than 100 employees may be required to report, but this will depend on how Ireland transposes the Directive, as this requirement is not mandated at EU level. Importantly, this is a separate obligation from the current Irish gender pay gap reporting regime.
Where reporting identifies an unexplained pay gap above 5%, employers must investigate. If the gap cannot be justified using objective, gender‑neutral criteria and fixed within six months, employers will be required to conduct a joint pay assessment with worker representatives.
Given that Member States are progressing at different speeds, and with fewer than six months remaining before the transposition deadline it is no longer sensible to delay planning. Irish employers, large and small, should now take practical steps to prepare, regardless of size or sector.
Organisations should begin by ensuring they fully understand the Directive’s requirements or seek expert support where internal capacity is limited. Conducting an internal audit of current pay practices is an essential starting point. Employers must be able to justify pay decisions using objective, gender‑neutral criteria.
Key questions include:
- How were current salaries set?
- Is there documented, consistently applied criteria?
- Did starting salaries vary due to negotiation or market rates?
- How do managers currently decide on pay progression?
Market norms will not constitute acceptable justification. Where performance is used as a rationale, employers will need strong, well‑documented performance management processes to support this. The purpose of the audit is to identify inconsistencies and risks in light of what we know so far about the Directive.
Next, organisations should define their categories of workers and what constitutes equal work or work of equal value, which will be fundamental to transparency obligations and future reporting. This may involve developing job families, role levels and comparator groups.
A robust job evaluation framework should then be created or refreshed, using objective, gender‑neutral criteria such as skills, responsibility, experience and working conditions. This framework underpins the development of clear salary bands, which must be transparent, evidence‑based and directly linked to evaluation outcomes. Many organisations have salary bands on paper, but inconsistencies commonly arise in how individuals are placed on the band at hire or how progression is applied.
Employers should also formalise their pay and progression policies to support transparency and demonstrate alignment with the Directive. Recruitment processes will require particular attention. Even where organisations fall below the threshold for gender pay gap reporting, publishing salaries will still have internal consequences. Employees will naturally expect transparency, and unclear or inconsistent practices can undermine culture and trust.
Organisations should also review and strengthen their data and reporting systems. Under the Directive, employers must be able to report by:
- category of worker
- gender
- all pay components (including bonuses)
- progression criteria
The critical role of managers
Managers will be central to the success of pay transparency. They conduct interviews, make pay decisions and respond to employee queries. Training will be needed on:
- how pay is determined
- how salary bands work
- how progression is applied
- what can and cannot be discussed during recruitment
- how to handle pay‑related information requests
Organisations may be prepared if they can confidently answer yes to the following:
- Do you have a job grading structure that enables reporting by category of worker?
- Are you prepared to share salary ranges and explain progression?
- Are managers trained to apply pay practices consistently?
- Can you explain pay differences using objective, gender‑neutral criteria?
- Do your systems support gender pay reporting and joint assessments?
If not, preparation needs to begin, and arguably you might already be on the back foot. Even without final Irish legislation, the Directive’s core obligations are fixed, and employers will be expected to start getting ready to comply.
If you need further advice or guidance on how the EU Pay Transparency Directive will impact your business, our team here is happy to help. Get in touch with us today.
