EU Pay Transparency Directive: A Practical Guide for Irish Employers – by Caroline Reidy  

Pay transparency is a major area of focus for employers in Ireland (and across Europe) these days, particularly since the publication of EU Pay Transparency Directive in May 2023. Employers can expect one of the most significant shifts in employment law in recent years when the Directive is transposed into Irish legislation next year. 

The purpose of the Directive is essentially to build fairer, more accountable workplaces where pay decisions can stand up to scrutiny. It marks a turning point for fairness in the workplace and, from the perspective of employers here in Ireland, early preparation is key.  

In this guide, we’ll explain what the Directive means, why it matters, and how Irish employers can get ready. 

What Is the EU Pay Transparency Directive? 

The EU Pay Transparency Directive (“the Directive”) is an EU-wide legislative effort to close the gender pay gap and promote fairness in compensation. The Directive outlines a number of obligations that will significantly impact HR practices – such as disclosing salary ranges in job ads, banning pay history questions, giving employees the right to pay information, expanding gender pay gap reporting, prohibiting pay secrecy clauses, and requiring joint pay assessments where unjustified gaps persist. 

In terms of timelines, whilst the Directive itself came into force in June 2023, the Irish government has until June 7th 2026 to transpose the full Directive into national law. This is expected to happen through the forthcoming Pay Transparency Bill which has been included in the Spring 2025 Legislative Programme.  

Rationale Behind the Pay Transparency Directive 

The principle of equal pay for equal work has already been established in EU law (originally introduced in the EU as far back as the Treaty of Rome in 1957), yet in reality the gap is closing far too slowly hence the increased legislation. The Pay Transparency Directive was introduced to tackle this challenge head-on by strengthening existing measures, embedding transparency into pay practices, and ensuring a consistent approach across all Member States. The key rationale behind the Directive are as follows: 

• Persistent Gender Pay Gap: Women across the EU still earn, on average, 13% less than men for similar work (European Commission, 2023). Progress in closing this gap has been slow, and one of the key challenges is the lack of transparency. Without access to clear pay information, employees often struggle to identify or challenge instances of unequal pay.  

• Limited Effectiveness of Existing Legislation: Ireland has already taken important steps with the introduction of Gender Pay Gap Reporting in 2022, but the new Directive goes further. While the principle of equal pay for equal work has long been protected under EU law (Article 157 TFEU), enforcement has been inconsistent across Member States.  

• Burden of Proof: Under current rules, the onus is typically on the employee to demonstrate pay discrimination. The new Directive changes that, placing the burden on the employer to prove that any pay differences are based on objective, gender-neutral criteria.   

• Economic and Social Benefits: Closing the gender pay gap is expected to have real social and economic benefits. Research from the European Institute for Gender Equality shows that improving gender equality across pay, employment, and education could increase EU GDP per capita by up to 9.6% by 2050, create over 10 million additional jobs, and significantly reduce poverty among women. 

• Encouragement of Cultural Change: By embedding pay transparency into recruitment and pay-setting processes, the Directive aims to drive a broader cultural shift toward fairness and accountability in the workplace.  

• Alignment Across Member States: The Directive ensures a consistent framework across all EU Member States, avoiding fragmentation and ensuring all workers across the EU benefit from a consistent level of protection and transparency.  

Key Obligations for Irish Employers under the EU Pay Transparency Directive  

As we have already mentioned, Ireland has already introduced Gender Pay Gap (GPG) reporting in 2022, meaning many of the Directive’s requirements are already in place.The EU Pay Transparency Directive requires employers to commit to additional reporting measures and enhanced transparency around how pay data is collected and disclosed. The key obligations for Irish employers relate not only to current employees but also potential employees: 

Before Employment  

Pay Transparency Before Employment  

One of the Directive’s key requirements is that employers must disclose the initial pay level or pay range for a position to prospective candidates. According to the Directive:  

“Applicants for employment should receive information about the initial pay or its range in a manner such as to ensure an informed and transparent negotiation on pay, such as in a published job vacancy notice, prior to the job interview, or otherwise prior to the conclusion of any employment contract.” 

While employers and applicants can still negotiate outside the published range, the emphasis is on openness and fairness from the outset.  

Prohibition on Pay History Questioning  

To prevent perpetuation of historical pay inequalities, the Directive prohibits employers from asking candidates about their current or previous salaries. The Directive specifically states: 

“Employers should not be allowed to enquire or proactively try to obtain information about the current pay or prior pay history of an applicant for employment.” 

This measure ensures that compensation offers are based on the role’s value and the candidate’s qualifications, rather than being rooted in potentially discriminatory past earnings.  

The General Scheme of the Equality (Miscellaneous Provisions) Bill 2024, published in January 2025, sets out how Ireland plans to implement Article 5 of the EU Pay Transparency Directive. The Bill proposes that salary ranges must be included in job advertisements (going beyond the Directive’s baseline requirements). It also reinforces the prohibition on asking candidates about their pay history. While still subject to legislative progress, these developments reflect Ireland’s clear intent to embed greater transparency into recruitment practices.  

During Employment  

Employee Rights to Pay Information  

The Directive explicitly states that: 

“Workers shall have the right to request and receive in writing information on their individual pay level and the average pay levels, broken down by sex, for categories of workers performing the same work as them or work of equal value to theirs.” 

Employers will be required to provide this information within two months of the request.  

Prohibition on Pay Secrecy  

Employers will not be able to prevent employees from discussing their salaries – the Directive states: 

“Workers shall not be prevented from disclosing their pay for the purpose of the enforcement of the principle of equal pay. In particular, Member States shall put in place measures to prohibit contractual terms that restrict workers from disclosing information about their pay.” 

On the back of this, we can expect that pay discrimination cases have stronger enforcement after the introduction of the legislation. Irish employers must ensure that pay secrecy clauses are removed or invalidated from employment contracts. 

Gender Pay Gap Reporting  

Article 9 of the Directive dictates that employers will need to report gender pay gap data, broken down by categories of workers that do equal value/equal work, and basic vs. variable pay. This is one of the most discussed elements of the Directive here in Ireland as it represents a significant change in the current pay gap reporting requirements. Let’s dive into this a bit more… 

Gender Pay Gap Reporting: Expanded Responsibilities  

As we have already established, Irish employers already have responsibilities under the Gender Pay Gap Information Act 2021, which requires companies with 50 or more employees (from 2025) to publish annual reports on their overall gender pay gap. However, under the EU Pay Transparency Directive, these obligations will significantly expand. 

Under the directive, employers will be required not only to report on the average gender pay gap across the organisation, but also to break this down by categories of workers performing the same or equal-value work, including details on both basic pay and variable components such as bonuses. There are different reporting requirements and timelines for organisations based on the number of employees. Reporting timelines are as follows: 

• Employers with 250+ employees: Annually from June 2027. 

• Employers with 150–249 employees: Every three years from June 2027. 

• Employers with 100–149 employees: Every three years from June 2031. 

• Employers with fewer than 100 employees: Not obliged, but may report voluntarily (or if required under national law). 

In addition, employers must ensure that gender pay gap data is accessible to employees and their representatives, and if a 5% or greater unexplained pay gap persists within any category of workers for more than six months, a joint pay assessment with employee representatives becomes mandatory. 

What Happens if you Find a Pay Gap? 

One of the Directive’s most significant provisions is the obligation to act when unjustified pay gaps are uncovered. If a gender pay gap of 5% or more is identified within a category of workers performing equal-value work, and it cannot be explained by objective, gender-neutral criteria, employers must take corrective steps. In practice, this may include: 

• Uncapped backpay claims: Employees affected by unjustified disparities may be entitled to full compensation for lost earnings, including salary, bonuses, and benefits. Importantly, there is no cap on the amount that can be awarded. 

• Structural changes to pay policies: Employers may need to revise pay scales, progression frameworks, or job evaluation methods to eliminate systemic inequalities and prevent gaps from recurring. 

• Joint pay assessments: A formal process carried out with employee representatives to identify the causes of the gap and agree on corrective measures. This collaborative approach is intended to ensure transparency and accountability in how solutions are developed. 

• Court orders and enforcement actions: If gaps persist or corrective action is not taken, national enforcement bodies or courts may intervene. This could include binding orders to amend pay structures, financial penalties, or wider compliance measures. 

Gender Pay Gap Requirements Compared: Gender Pay Gap Information Act vs EU Pay Transparency Directive  

	Gender Pay Gap Information Act (Ireland, 2021)	EU Pay Transparency Directive (2023)
Legal Status	Enacted and in effect since 2021	Adopted in 2023; must be transposed by Ireland by 7 June 2026
Employer Thresholds	Reporting required for employers with 50+ employees (from 2025)	Reporting obligations phased in: 250+ employees annually, 150–249 every 3 years, 100–149 from second half of 2027
Reporting Focus	Overall gender pay gap across the organisation	Pay gap by category of workers performing same or equal-value work, broken down by basic and variable pay
Data Publication	Snapshot in June; report published annually	Broader and deeper publication duties, including accessible data for workers and worker representatives
Action on Pay Gaps	No formal requirement to address gaps, but employers must describe measures being taken	If an unexplained pay gap ≥ 5% persists for 6+ months, joint pay assessment with employee reps is mandatory
Remedies and Enforcement	Circuit Court or WRC can compel compliance	Stronger enforcement: fines, backpay, no cap on compensation, and shifting burden of proof to employer
Transparency Criteria	No requirement to disclose criteria used for pay setting	Employers must provide clear, gender-neutral criteria for determining pay and progression

Real World Implications: Lessons from the ASDA case 

The ongoing ASDA equal pay litigation in the UK illustrates the potential consequences of failing to address pay inequality. 

The case, which began in 2014, centres on whether Asda’s predominantly female shop-floor employees were underpaid compared to their largely male colleagues working in warehouses. The claim highlights that shop workers were paid up to £3.74 less per hour, despite performing work of equal value. 

The legal process in the UK has three stages. To date, the shop-floor workers have succeeded in the first two, with courts ruling that their roles are both comparable to and of equal value with warehouse roles. The final stage will determine whether Asda can provide an objective justification for the pay difference. 

If unsuccessful, the case could cost the retailer billions of pounds in back pay and may reshape pay structures across the grocery retail sector. 

For Irish employers, the implications are clear. While this is a UK case, UK judgments are often considered persuasive in Irish tribunals. With many employers operating across both jurisdictions, the ASDA case may encourage similar challenges in Ireland. 

What Are the Consequences of Non-Compliance? 

Failing to comply with the EU Pay Transparency Directive carries serious risks for employers. While regulatory penalties are an obvious concern, the real impact extends far beyond compliance. Organisations that fall short risk damaging their reputation, losing the trust of employees, and struggling to attract the talent they need to grow. 

Key consequences include: 

• Uncapped financial exposure: As we have discussed, employers may face claims for full back pay, bonuses, and benefits where unjustified pay gaps are found. And critically, the burden of proof rests with the employer, not the employee. 

• Regulatory fines and enforcement: National authorities will have the power to impose penalties, particularly where pay gaps of 5% or more remain unaddressed. 

• Reputational damage: Inaction on pay inequality can undermine public trust, investor confidence, and ESG ratings, with long-term consequences for brand value. 

• Talent attraction and retention challenges: Today’s workforce expects fairness, transparency, and inclusion. Falling short risks losing top performers to more progressive employers. 

• Lower engagement and morale: Pay inequality can erode trust internally, leading to disengagement, higher turnover, and difficulty filling critical roles. 
   

Ultimately, pay transparency should not be viewed as a “box-ticking” exercise. For Irish employers, it is an opportunity to strengthen organisational culture, build credibility, and create a more sustainable workplace. 

Challenges of Pay Transparency for Irish Employers 

While the EU Pay Transparency Directive offers significant benefits, employers should be aware of the challenges it may create if not carefully managed. These challenges are not insurmountable, but they do require forward planning and clear communication: 

• Employee dissatisfaction may arise if salary differences are visible but not well explained, particularly where pay progression structures lack clarity. 

• Pressure on pay alignment could lead to increased payroll costs if adjustments are made too quickly without a sustainable, long-term plan. 

• Internal tension or conflict may emerge where employees misinterpret pay differences without the full context or understanding of objective criteria. 

For Irish employers, the key is early preparation. By putting robust job evaluation frameworks in place, clearly defining objective, gender-neutral pay criteria, and communicating openly with employees, these challenges can be anticipated and addressed. With the right groundwork, employers can minimise risk and realise the long-term cultural benefits of greater fairness, trust, and accountability in the workplace. 

What Should Employers Do Now? Caroline’s Practical Steps 

With the Directive coming into force by 2026, Irish employers should view 2025 as a critical year for preparation. Early action will not only reduce compliance risks but also help build stronger foundations for a fair and transparent workplace. Here are Caroline’s recommended steps: 

1. Start with a Pay Transparency Audit 

• Review your current practices, including job advertisements, published pay ranges, pay progression policies, and interview templates. 

• Assess whether salary bands are clear, objective, and applied consistently. 

• Analyse pay by categories of workers performing equal or comparable work to identify potential gaps. 

2. Train Hiring Managers and HR Teams 

• Ensure managers understand that asking about salary history is prohibited. 

• Provide training on consistent, fair interview practices to reduce bias. 

• Equip hiring teams to explain salary ranges and progression frameworks clearly to candidates. 

3. Update Contracts and Policies 

• Remove or revise any pay secrecy clauses to align with the new requirements. 

• Embed transparency into contracts, progression pathways, and promotion policies. 

• Ensure policies outline how pay decisions are made using objective, gender-neutral criteria. 

4. Strengthen Systems and Processes 

• Put systems in place to respond promptly to employee requests for pay information, meeting the two-month requirement. 

• Develop internal reporting processes so gender pay gap data can be tracked by job category, not just at organisational level. 

• Create a framework for joint pay assessments with employee representatives, so you are ready if unexplained pay gaps are found. 

5. Communicate and Engage Early 

• Begin conversations with employees about your organisation’s approach to transparency and fairness. 

• Position pay transparency as part of a broader commitment to equity, inclusion, and trust. 

How The HR Suite Can Help 

For many organisations, with obligations at so many different points of the employment cycle, navigating the requirements of the EU Pay Transparency Directive can feel daunting. At The HR Suite, we work closely with organisations to make the process manageable, practical, and tailored to your needs. We can support you with: 

• Pay Transparency Audit: A comprehensive review of your pay structures, job evaluation processes, and recruitment practices to identify risks and opportunities for improvement before the Directive takes effect. 

• Gender Pay Gap Reporting: Guidance and hands-on support in meeting your reporting obligations under both the Gender Pay Gap Information Act and the new EU requirements, including data analysis and report preparation. 

• Policy Reviews and Interview Training: Updating contracts, policies, and recruitment materials to embed transparency, alongside manager training to ensure hiring and pay practices are objective, consistent, and compliant. 

• Ongoing Advisory Support: As your HR partner, we provide practical advice and best practice insights to help your organisation move beyond compliance and embrace pay transparency as a driver of fairness and trust. 

To discuss a Pay Transparency Audit or explore how we can help your business prepare, contact us at info@thehrsuite.com or call (066) 710 2887. You can also book a consultation directly here. 

““This is a far-reaching piece of legislation that requires the HR and Rewards team to proactively work together to prepare for this significant legislation.  The time to act is now. By embracing transparency, we create a workplace that values fairness, trust, and inclusivity.” – Caroline Reidy