The Pay Transparency Directive

Our Employment Law & Benefits team outlines the key obligations under the Pay Transparency Directive and the practical steps that employers in the financial services sector should be taking now to prepare for its introduction to the Irish employment law landscape.

What you need to know

• Pay gap reporting obligations: The Directive introduces additional Gender Pay Gap (GPG) reporting obligations. Employers will be required to provide information on the GPG between “categories of workers” that do the same work or work of equal value, by reference to ordinary basic wage or salary and complementary or variable components.
• Joint pay assessments: Employers will need to conduct a pay audit called a Joint Pay Assessment in cooperation with their workers’ representatives in certain circumstances.
• Recruitment: The Directive requires employers to disclose the initial pay range for job vacancies prior to employment. It also prohibits employers from asking about job applicants’ prior salaries.
• Pay information: Workers have a right under the Directive to request and receive information on their individual pay level and average pay levels.
• Changes to pay discrimination cases: The Directive brings a number of changes to pay discrimination cases including a shift in the burden of proof in certain circumstances.
• Transposition progress: Ireland must transpose the Pay Transparency Directive by June 2026 and some legislative progress has been made to date.

With a transposition deadline of 7 June 2026, Ireland is currently preparing to incorporate the requirements of the EU Pay Transparency Directive into national law.

The Directive brings new obligations for employers in the financial services sector. It represents a significant step towards ensuring equal pay for equal work and work of equal value between men and women. The Directive complements the general trend towards diversity and inclusion in the sector, including the Central Bank of Ireland’s commitment to a diverse and inclusive workplace. The regulator’s focus on D&I initiatives is evidenced by the fact that it has:

• Published its annual gender pay gap since 2018
• Recently published an ambitious Diversity & Inclusion Strategy 2022-2026, and
• Signed up to the European System of Central Banks’ Equality, Diversity & Inclusion Charter in 2022

Our Employment Law & Benefits team outlines what the Directive will mean for the financial services sector and the practical steps that employers should be taking now to prepare for its transposition.

Gender Pay Gap reporting

Ireland introduced GPG reporting in 2022. Currently, organisations with 50 or more employees must report their GPG annually. This involves publishing key metrics broken down by gender only.

The Directive introduces additional reporting obligations, requiring employers to provide information on the GPG between “categories of workers” that do the same work or work of equal value, by reference to ordinary basic wage or salary and complementary or variable components. The reporting obligations will initially apply to all employers with at least 150 employees. This threshold will drop to 100 employees after four years. Those with 250 employees or more will have to report annually from 7 June 2027, based on the previous calendar year. All other in-scope companies will have to report every three years.

Ireland is permitted, under the Directive, to require employers with fewer than 100 workers to provide this information. This will be a matter for national implementing legislation.

Joint pay assessments

Where an organisation’s GPG reporting demonstrates:

• At least a 5% difference in the average pay level between male and female workers in any category of workers; and
• This GPG cannot be justified by objective and gender-neutral factors; and
• The GPG has not been remedied within six months of the date of the GPG report.

The Directive requires employers to conduct a pay audit called a Joint Pay Assessment (JPA) in cooperation with their workers’ representatives. It is intended that JPAs will identify, remedy and prevent differences in pay between male and female workers that are not justified on objective, gender-neutral grounds. The Directive sets out a number of data points which must be analysed in a JPA.

Once the JPA has been carried out, it must be shared with employees and their representatives and the monitoring body prescribed by statute.

The employer must remedy any unjustified differences in pay within a reasonable period of time, in consultation with the workers’ representatives. When implementing the remedial measures, an analysis of the existing gender-neutral job evaluation and classification systems or the establishment of these systems should be carried out. This exercise is aimed at ensuring that any direct or indirect pay discrimination on the grounds of sex is excluded.

Pay transparency in recruitment

Article 5 of the Directive requires employers to disclose the initial pay or pay range for job vacancies prior to employment.

In Ireland, the General Scheme of the Equality (Miscellaneous Provisions) 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 at job advertisement stage. This may be subject to change, however.

The Directive also prohibits employers from asking about applicants’ prior salaries at the recruitment phase. The General Scheme of the Bill also proposes to transpose this provision. Again, this may be subject to change.

Pay information

Workers have a right under the Directive to request and receive, in writing, information on their individual pay level and average pay levels, broken down by sex, for “categories of workers” performing the same work or work of equal value to theirs. These requests may be made through the workers’ representatives in accordance with national law or through an equality body designated in national implementing legislation. The information sought must be provided by the employer within a reasonable period of time, and in any event, within two months of the request. If the information provided by the employer is inaccurate or incomplete, a worker may request, either personally or through their representatives, additional and reasonable clarifications and details. Following this request for clarification, the worker will be entitled to receive a substantiated reply from the employer.

Employers are obliged to remind employees of their right to receive this information every year and how it might be exercised.

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”, i.e. how a worker moves to a higher pay level.

Employers will not be able to restrict employees from disclosing their pay for the purpose of the enforcement of the principle of 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.

Changes to pay discrimination cases

Shift in burden of proof

Where an employee claims that their employer has failed to comply with certain obligations under the Directive, the burden of proof will shift to the employer from the outset to prove that there has been no direct or indirect discrimination regarding pay. This reversal of the burden of proof shall not occur where the employer proves that the infringement was manifestly unintentional and of a minor character. However, it is open to the Member State to introduce evidential rules which are more favourable to the worker.

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. Under the Directive, employees are not confined to choosing a comparator who works for the same employer. The Directive explicitly states that where pay conditions are set by a “single source”, i.e. by a group of companies where pay is set centrally for more than one employer, a comparator can be drawn from one of the other entities in the group. The comparator used does not have to be someone employed by the employer at the same time as the employee. A previous employee may be used as a comparator for these purposes. Where no real-life comparator exists, any other evidence may be used to prove the alleged pay discrimination including statistics or the use of a hypothetical comparator.

Intersectional discrimination

The Directive notes that gender-based discrimination may take many forms. It may involve an intersection of gender and another protected characteristic such as:

• Racial or ethnic origin
• Religion or belief
• Disability
• Age, or
• Sexual orientation

Under the Directive, therefore, it is possible to take this combination of factors into account when, for example, setting penalties for breaches of the Directive.

Penalties under the Directive

The Directive requires Member States to set out rules on effective, proportionate and dissuasive penalties. These include fines and compensation for employees. There is a significant latitude given to Member States to determine the extent and form of these penalties.

Transposition progress

The General Scheme of the Equality (Miscellaneous Provisions) Bill 2024 was published in January 2025, which proposed to transpose Article 5 of the Directive. Since then, it has been announced that the Bill has been renamed as the Equality and Family Leaves (Miscellaneous Provisions) Bill. The change in name accounts for potential proposed additions related to surrogacy leave and leave for pregnancy loss. The General Scheme is currently undergoing pre-legislative scrutiny by the Joint Committee on Children and Equality and is expected to undergo significant changes during this process.

The Government’s Spring and Summer Legislative Programmes both indicated that work was underway on the preparation of the Heads of a Pay Transparency Bill, which is described as “A Bill to transpose the EU Pay Transparency Directive”. From this description it would seem that full transposition of the Pay Transparency Directive is to be achieved through this Bill. It is unclear whether there will be a carve-out in the legislation relating to Article 5 of the Directive, given that the General Scheme originally proposed to transpose this aspect.

Preparation tips for employers

Transposition of the Directive is in its early stages. There are options available for employers in the financial sector who wish to prepare for the effects of the Directive. These include:

• Conduct a pay audit, gathering information on all forms of remuneration for every employee including basic pay, bonuses, benefits, in-kind benefits and overtime
• Ensure you have up-to-date information about the gender breakdown of employees
• Start defining “categories of workers” and “work of equal value”
• Conduct a “dry run” gender pay gap analysis
• Review and update recruitment practices, including job advertisements and interview questions relating to prior salaries, and ensure that they comply with the Directive
• Review pay-setting and progression criteria and plans and ensure that they comply with the Directive
• Prepare for employee information requests by developing a clear internal process for dealing with them
• Review and update employment contracts and policies with the Directive in mind
• Stay informed of national transposition progress
• Engage with legal experts specialising in employment law to help ensure compliance

Comment

The Pay Transparency Directive will bring about significant changes to pay practices in Ireland. While transposition into national law has not yet been achieved, it is crucial that employers prepare for the Directive’s effects by taking proactive steps and by keeping informed of legislative developments.

For more information, please contact our Employment & Benefits team.

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