The Pay Transparency Directive

The Government Spring 2025 Legislative Programme includes reference to the ‘Pay Transparency Bill’. If enacted, this bill will transpose the EU Pay Transparency Directive into Irish law. Our Employment Law & Benefits team looks at some of the key changes that the Directive will bring and some of the steps employers can take now to get ready for the upcoming changes in law.

• The EU Pay Transparency Directive aims to enhance pay transparency and improve access to redress for workers who allege gender-based pay discrimination.
• The Spring 2025 Legislative Programme suggests that transposition will be completed by way of the Pay Transparency Bill.
• The Directive requires employers to report on the gender pay gap between ‘categories of worker’ broken down by basic and variable pay. It also provides for joint pay assessments with worker representatives.
• The Directive promotes transparency in job advertisements, information regarding pay levels and the pay levels of colleagues. It also introduces a prohibition on pay secrecy.
• The Directive will bring in significant changes to discrimination case procedures and penalties.

Ireland has until June 2026 to transpose the EU Directive on Pay Transparency into national law. The Government Spring 2025 Legislative Programme includes reference to the ‘Pay Transparency Bill’ which has been earmarked for this purpose. We explain the key provisions of the Directive and its impact on Irish employers.

Pay gap reporting obligations

For Ireland, having introduced Gender Pay Gap (GPG) reporting in 2022, many of the requirements of the Directive have already been met. However, the Directive will require employers to make further adjustments to how they report the data.

Currently, the GPG reporting regime requires the data be broken down by gender only. However, the Directive will require that businesses report on the gender pay gap between ‘categories of worker’ broken down by basic and variable pay. While this information does not need to be made public in the same way as GPG reporting, it must be provided to employees and employee representatives. It may also need to be provided to the Workplace Relations Commission and the Irish Human Rights and Equality Commission, if this is made a requirement of the Irish implementing legislation.

Joint pay assessments

The purpose of a joint pay assessment is to identify, remedy and prevent the differences in pay between male and female workers by triggering a review and revision of pay structures within the organisation.

Where an employer’s GPG Report shows:

• A 5% or more gender pay gap in any category of workers
• The pay gap cannot be justified by objective and gender-neutral factors, and
• The pay gap has not been remedied within six months of the date of the GPG report,

then a ‘joint pay assessment’ may need to be carried out.

The exact methodology for a joint pay assessment is to be agreed with employee representatives and so the form and scope will likely differ across Member States and indeed across sectors. It is likely that following the enactment of the legislation, government guidance will be published on this topic. The recitals of the Directive, which are not technically binding, state that whether or not a pay gap can be justified is something which is to be agreed with employee representatives. It is unclear at the moment what the process will be should the employer and employee representatives not agree on whether the gap is justified. This is something which may be ironed out in the implementing legislation.

Pay transparency in job advertisements

Employers will be required to disclose the initial pay or pay range for job vacancies without candidates having to ask for it. This does not prevent either party from negotiating outside of the stated pay range. In addition, employers will not be permitted to ask applicants about their prior salaries. The General Scheme of the Equality (Miscellaneous Provision) Bill 2024 was published in January 2025. Head 4 of the Bill seeks to transpose this aspect of the Directive, requiring employers to provide information about salary levels or ranges in the job advertisement.

Employee’s right to pay information

Employees will have the right to receive information regarding pay levels and the pay levels of colleagues performing the same or similar work.

Employers with over 50 workers will be required to make accessible to employees the criteria they use to determine workers’ pay, pay levels and pay progression. These criteria are required to be objective and gender neutral such as performance, seniority and skills.

Workers have the right to request and receive information in writing about:

• Their individual pay level
• The average pay levels for workers in similar roles

The average pay levels must be broken down by gender and apply to:

• Workers performing the same work
• Workers performing work of equal value

This information must be provided within two months of the request being made.

When complying with these requests, employers will need to be mindful of balancing pay transparency rights with privacy rights. When sharing information employers should use techniques such as anonymisation, aggregation and secure data sharing platforms. The Directive states that where the disclosure of information would lead to a disclosure, either directly or indirectly, of the pay of an identifiable worker, only the worker’s representative or an equality body may have access to the information. The representative or the equality body may then inform the requesting employee if they have a possible claim without disclosing the actual pay of the other employee or employees.

Prohibition on pay secrecy

Employers will not be able to restrict employees from discussing amongst themselves or disclosing their pay for the purpose of the enforcement of the principle of equal pay. The Directive only introduces full transparency for the purpose of ensuring equal pay. Employers will still be entitled to have non-disclosure requirements for their employees for other reasons such as not disclosing their pay to competitors. The approach taken here could be justified on the basis of protecting business interests or trade secrets.

Changes to pay discrimination cases

Shift in burden of proof

The burden of proof in pay discrimination cases will lie with the employers. Essentially, this means that the employer will be required to prove that there has been no direct or indirect discrimination regarding pay. Currently, in discrimination and equal pay claims, the burden is on the employee to present facts that suggest discrimination before it shifts to the employer to prove otherwise.

Identifying a comparable employee

To successfully pursue an equal pay claim, the employee concerned must demonstrate that they are paid less than an employee of the opposite gender performing the same work or work of equal value. The Directive requires EU Member States to clarify in their legislation the mechanisms facilitating the identification of ‘same work or work of equal value’.

The Directive requires that employees are not confined to choosing a comparator within the same company or organisation. The Directive explicitly states that where pay conditions are determined by a ‘single source’, i.e. set centrally for more than one employer, for example within a group, a comparator can be drawn from one of the other entities in the group.

The comparator also does not have to be limited to workers employed by the employer at the same time as the person asserting their rights. A previous employee may be used as a comparator for these purposes.

Where no real-life comparator exists, the use of a hypothetical comparator can be used for the person asserting their rights to show that they have not been treated the same way as a hypothetical comparator of another sex would have been treated. This may be of particular use to workers in sectors which are dominated by one gender such as the care sector.

Intersectional discrimination

The Directive notes that gender-based discrimination may take many forms. It may involve an intersection of gender and one of the other protected characteristics such as:

• Race
• Sexual orientation
• Religion
• Disability
• Age
• Family status
• Marital status, or
• Membership of the travelling community

The Directive states that, in the context of gender-based pay discrimination, it should be possible to take the combination into account. This approach includes determining an appropriate comparator to assess the proportionality and, where relevant, deciding on the level of compensation to be awarded or the penalties imposed.

Penalties

The equal pay regime in Ireland is currently based on individual enforcement through equal pay claims. However, the Directive requires Member States to set out rules on effective, proportionate and dissuasive penalties, including fines and compensation for employees. There is a significant latitude given to Member States to determine the nature of these rules. Further detail on this should emerge when we see the draft legislation implementing the Directive.

Next steps

Ireland has until June 2026 to implement this Directive and the 2025 Spring Legislative Programme indicates that the State has taken the first steps towards transposition. Steps which employers can take to prepare for their new obligations include:

• Do an early assessment of whether there are any gaps of over 5% in categories of workers: Joint pay assessments may be onerous, difficult and expensive for organisations. An early assessment will give you time to bring this gap within the threshold ahead of the requirement of mandatory reporting.
• Consider whether your organisation asks candidates about their salary history: Ensure everyone in your organisation who may be involved in interviewing candidates understands this will soon be prohibited.
• Adopt a more robust system for tracking and analysing data: The Directive places a strong emphasis on accountability and transparency. You may need to consider the data protection aspects of processing and storing this data. Consider whether your systems will allow you to respond to information requests within the two-month time frame.
• Consider your current GPG reporting methodology and how this may need to be updated in line with the Directive: The Directive states that Member States should ensure analytical tools and methodologies are made available and are easily accessible to support the assessment of the value of work and further guidance on this should be published in future. Employers should be aware that this may not be a straightforward exercise as workers doing work of ‘equal value’ may not even work in the same location.
• Seek legal advice: Irish employers should proactively assess their current practices and seek legal advice to ensure compliance well in advance of the Directive taking effect. By doing so, employers can not only mitigate risk but also position themselves as champions of workplace equality in a rapidly evolving regulatory landscape.

For more information and expert advice, contact a member of our Employment Law & Benefits team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.