The vision of a more equitable pay landscape is coming closer to reality with the introduction of pay transparency legislation across the world. The European Union’s landmark set of rules, the Pay Transparency Directive, is aiming to reshape pay practices in all member states, where the average gender pay gap remains at a significant 13 per cent.
The directive, which must be transposed into Irish law by June 7th, 2026, introduces a slew of demands for Irish companies of all sizes. Ireland’s own gender pay gap legislation has already heightened obligations and promoted awareness in this area over the past two years, but the directive greatly expands the scope of those requirements.
Under the directive, all EU companies with at least 150 employees will be in scope for its gender pay gap reporting provisions, which reduces to 100 after four years. Companies with more than 250 employees will be obliged to report gender pay gaps on an annual basis, while others will have to report every three years. Those with fewer than 100 employees will fall outside the scope of the directive’s gender pay gap reporting requirements but may have obligations under their local pay reporting regimes.
Christine Aumayr-Pintar, senior research manager in the working life unit at Eurofound, the EU agency for the improvement of living and working conditions, says pay transparency instruments – such as the Irish gender pay gap reporting legislation – have become an increasingly utilised tool in the EU and beyond.
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“They aim to reduce the secrecy around pay, for example by putting pay ranges for a job in vacancy notes, reporting data on pay gaps within or outside the company, by allowing workers to obtain information on how their pay has been set in relation to comparable workers of the other gender, or by scrutinising companies’ job evaluation and remuneration schemes,” says Aumayr-Pinter.
But while these can be beneficial, they need to be well designed in order to be most effective. The new pay directive seeks to ensure this, introducing gender pay reporting in countries where there is none, and expanding the scope of requirements in countries already doing so by asking for more granular detail on pay for different types of work.
The relative imminence of the June 2026 date means Irish businesses must start preparing now for the increased reporting demands of the directive, says Maeve McElwee, executive director of employer relations at Ibec.
“To a large extent it can be said that the current Irish legislation on gender pay gap reporting meets the directive’s requirements in that the Gender Pay Gap Information Act and the regulation requires the data to be presented based on gender and employment status, ie whether part-time or full-time. However, there is no requirement to break the information down further into different categories of jobs,” explains McElwee. “The directive seeks to address this and places further obligation on employers to do so.”
According to the directive, employers will be required to have pay structures in place to enable the assessment of whether workers are in a comparable situation regarding the value of their work which will be based on objective gender-neutral criteria such as skills, responsibility, effort, working conditions and any other relevant factors relevant to the role itself.
In addition to mandatory gender pay gap reporting requirements, the directive introduces a number of individual rights for employees in relation to pay transparency. These include an obligation to advise prospective candidates for a role of the salary range for each job and a prohibition on asking job applicants about their current salary. Employers will no longer be able to prohibit employees from disclosing their pay.
“The directive also introduces new rights for employees to request information on the criteria used to determine their pay, pay levels and pay progression and can also request information on what other employees are being paid on average in comparable roles broken down by sex for categories of workers performing the same work as them or work of equal value,” McElwee says.
According to Kevin Langford, partner in law firm Arthur Cox’s employment group, the measures contained in the directive will help to raise awareness of, and stimulate debate around, the underlying reasons for structural gender pay differences that exist. But this level of transparency means it will also likely lead to an increase in equal pay claims.
“The measures necessarily touch upon both social and governance aspects of ESG, which is a significant consideration for many businesses,” he says. “Compliance with the measures will be important for an organisation’s standing amongst its customers, clients, suppliers, shareholders, investors, media, general public and, of course most directly, its existing and prospective workforce. Poor performance will necessarily lead to reputational damage amongst the same cohort.”
In what is a fundamental shift, the directive makes clear that a breach of any of the requirements of pay transparency will shift the burden of proof to the employer in any equal pay claim. “This is not currently the case for discrimination and equal pay claims, where an employee must first prove facts from which a presumption of discrimination can be drawn before the burden can shift back to the employer to provide that no discrimination has occurred,” says Langford.
“In addition, the directive provides that where no real comparator can be established for an equal pay claim, an employee can use a hypothetical comparator or provide other evidence instead. This is a major departure from the current position; historically, the requirement to name a specific comparator has caused procedural difficulties for complainants.” Significantly, the directive provides for unlimited compensation to include full recovery of back pay and related bonuses or payments in kind and compensation for lost opportunities.
“Outside of the issues of gender pay gaps, the obligation on employers to categorise all roles and therefore workers into categories who do the same work or work of equal value has the potential to create issues among cohorts of employees who may challenge the categorisation of their skill sets and pay bands,” adds McElwee.
Given the significant obligations that the directive will introduce, companies are already starting to prepare. However, the recent Ibec HR Update Survey indicated that just 14 per cent of businesses have any preparations in place, despite recognising that the directive is expected to impact both process (level and frequency of reporting, required resources, expertise) and reward and recognition.
Ibec is encouraging members and all employers to look at the culture of their organisation but specifically in terms of pay, rewards and reviewing how performance is assessed, McElwee says. “Recruitment strategies and the policies and procedures associated with those strategies will also be relevant. Gathering and collating the necessary data in terms of headcounts and potential categories, reviewing employee contracts, analysing pay gaps and considering the objective justification for any differences will be useful in order to be properly prepared for when the time comes. Communications and engagement with employees in good time will be important, as has already been demonstrated in the reporting under existing gender pay gap legislation.” She notes that employers are already investing in initiatives to address gender pay gap issues where they exist in addition to a greater focus on diversity and inclusion in the workplace.
“We recommend that employers take action now to ensure that they are adequately prepared for the upcoming changes,” Langford adds. “They should get this item on the agenda and assemble a project team that includes senior management, HR/benefits, legal, IT etc, as input from various aspects of the business will be required to pull the required information together and to take any necessary remedial actions.”
This team should be advised of the risks of noncompliance and the potential advantages of good performance, he notes.
Businesses must also consider whether changes to data storage and collection need to be made to allow information requests to be processed within a reasonable time frame. Langford suggests that a complete review of current arrangements, including in relation to recruitment, remuneration and progression in the business, must be carried out to identify any gaps that may arise and address these gaps in line with the directive.
“Crunch the gender pay gap numbers for each category of workers in advance – identifying the issues will give you time to consider how best to address them.”