The EU Pay Transparency Directive: What It Means for Employers in Ireland

The EU Pay Transparency Directive will usher in a new era of clarity in workplace relations. What was once a great taboo in workplace conversations - the question of salary - could soon become a thing of the past with the EU Pay Directive set to become law by June 2026 at the latest.  

The purpose of the EU Pay Transparency Directive is to promote equal pay for equal work and reduce the gender pay gap across EU member states, including Ireland. It strengthens employees rights to fair and transparent pay information while increasing the obligations of the employer to disclose and report on pay structures. 

The directive was adopted by the European Parliament in April 2023, and in Ireland, the Pay Transparency Bill is currently before the Seanad.  and EU member states, including Ireland, must incorporate it into national law by June 2026. 

This Directive will result in substantial changes in the way that businesses handle pay reporting, fairness, and communication with their employees. In the world of payroll and HR, the methods for successfully deploying these necessary changes are something to be carefully considered. While salaries won’t be made public, measures will be in place to prohibit pay secrecy clauses in employment contracts, meaning employees will be more free to openly discuss their salaries. 

In Ireland, over 70% of businesses are investing in pay equity initiatives, which is a great step forward - but with the date for this Directive fast approaching, businesses all across Ireland will need to work hard to ensure that they will be compliant with changing regulation. 

The EU Pay Transparency Directive is a Europe-wide initiative which will seek to ensure equal pay, increase transparency in companies between employees in terms of the wages of their fellow workers, and work to close the gender pay gap. 

Ireland implemented local Gender Pay Gap reporting in 2022, with companies of 50 plus employees required to report from 2025 onwards, and so this Directive will mark growth and extension in the same sphere. 

• Adoption Date: April 2023 (by the European Parliament) 
• Implementation Deadline: June 2026 (for all EU member states) 
• Who It Affects: Companies with 100+ employees across EU countries, including Ireland 

Ireland already has a Gender Pay Gap Information Act (introduced in 2022), currently requiring companies with 150+ employees to report on gender pay differences. The new EU directive strengthens and expands these rules, bringing increased transparency and legal consequences for non-compliance. 

At the moment, the Employment Equality Act ensures that employees are entitled to bring a claim in respect of equal pay. If successful, the WRC or Circuit Court can award back pay, but this is limited. Under the new directive, employees would be entitles to the full recovery of back pay, which may result in a substantial award, depending on the duration of the equal pay issue.  

See also: How to Create a Gender Pay Gap Reporting Strategy

 

* The size of company (based on number of employees) outlined in the Gender Pay Gap Information Act at Section20A was enacted by Regulations The Employment Equality Act 1998 (Section 20A) (Gender Pay Gap Information) Regulations 2022 and further by Employment Equality Act 1998 (Section 20A) (Gender Pay Gap Information) (Amendment) Regulations 2024.  

The 2022 Regulations defined a relevant employer as one who employs not less than 250 employees and the 2024 Regulations amended the definition of relevant employer to an employer who employs not less than 150 employees. 

This figure is set to come down to 50 on the first anniversary of the 2024 Regulations. This is the requirement set out in the Gender Pay Gap Information Act 2021. The Directive and draft Bill also set the figure at 50. 

The EU Pay Transparency Directive will have a significant impact on Irish businesses, requiring them to adopt more transparent, data-driven pay practices.  

Companies with 50 or more employees already facing mandatory gender pay reporting, increasing the administrative burden and requiring robust systems to track and analyse pay gaps. Businesses will need to disclose salary ranges during recruitment and ensure pay decisions are based on objective criteria, reducing the risk of unconscious bias.  

Employees will also have the right to request written pay information on their level and all equal levels, which could lead to more pay-related disputes if gaps are not communicated clearly and comprehensively by each employer. Non-compliance poses legal and reputational risks, including potential fines and compensation claims.  

However, companies that proactively embrace pay transparency can enhance employee trust, improve retention, and strengthen their position as employers of choice in a competitive talent market, which could provide a competitive edge when it comes to fostering talent and retaining employees. 

With the directive set to become Irish law by June 2026, businesses must act now to review pay policies, implement pay reporting systems, and ensure they are prepared for greater public and regulatory scrutiny. 

• Conduct Pay Audits: Regularly assess and analyse gender pay gaps in your business, and strive to ensure that these gaps lessen as the years pass.  
• Update Recruitment Practices: Ensure pay ranges are included in job postings and remove salary history questions. 
• Implement Clear Pay Structures: Standardise how pay is determined based on objective criteria (e.g., skills, experience). 
• Invest in Technology: Use HR and payroll systems to automate gender pay tracking and ensure accurate reporting. 
• Train Leadership and HR: Educate managers on pay transparency requirements and fair pay practices. 

SD Worx Ireland has almost 30 years of on-the-ground experience in payroll compliance and reporting, and boasts an impressive team of experts between Dublin and Limerick, all of whom are well-informed on the very latest in policy updates and reporting requirements.  

At SD Worx Ireland, we have worked hard to help companies create Gender Pay Gap reports that work for them, employing our MegaPay software and its reporting capabilities to ensure our clients have access to solutions that work for them.  
 
To keep up to date with the latest changes, be sure to subscribe to our newsletter!