EU pay transparency FAQs

As companies are preparing to meet the requirements of the EU Pay Transparency Directive, we see a growing number of open questions across our EU jurisdictions in the CEE/SEE region. These questions cover all aspects of remuneration: from job architecture and explanation of pay gaps to reporting and enforcement.

Here we give high-level answers to selected questions that we receive from our clients. While the list is not exhaustive, it provides an indication of the strategic considerations and practical steps that lie between the wording of the Directive and compliance with it.  

It should be noted that Member States retain discretion in transposing the Directive and the precise scope of requirements and permissible gap justifications may vary across jurisdictions as national legislation, case law and regulatory guidance develop.

If you are interested in the latest updates on the implementation status in the CEE/SEE region, check our Pay transparency tracker.

1. What are the systemic considerations for designing or adopting a job architecture to comply with the Directive?

Any job architecture – whether built from scratch or adapted – must be grounded in transparent, objective and gender-neutral criteria.

It is crucial to understand the value a certain role has for the company’s business operations and avoid structural bias, such as automatically overvaluing leadership scope, treating physical effort as more valuable than emotional or cognitive load or rewarding management roles more than individual expertise. A review of existing job descriptions and grading systems should focus on the actual content and demands of each role rather than historical titles, informal hierarchies or specific factors attributable to individual employees.

Involving relevant stakeholders, including HR, legal and employee representatives, early in the process will help to ensure that the job architecture is comprehensive, genuinely reflective of the work being performed and defensible. Once set-up, the job architecture should be periodically reviewed and updated.

Dora Gazi Kovacevic (Partner, Croatia)

2. What should employers consider when grouping employees into categories?

The Directive defines “equal value” broadly, looking beyond job titles to the substance of the work itself. The grouping exercise must therefore be based on objective and gender-neutral criteria and applied consistently across the workforce.

In practice, this means employers cannot simply rely on existing departmental structures or legacy grading systems. Instead, they should reassess and group roles by considering the actual tasks, skills and qualifications required, physical or mental demands and level of responsibility involved. Two roles with different titles or located in different teams may well fall into the same category if the underlying work is of comparable value for the company’s business operations.

Companies operating across multiple EU Member States should also keep in mind that national transposition may introduce additional requirements and should therefore aim for a grouping framework that is flexible enough to accommodate local variations whilst maintaining overall consistency.

It is important to structure and document the grouping methodology clearly, as both employees and authorities will be entitled to scrutinise how categories were formed.

Berislav Draskovic (Senior Associate, Croatia)

3. How can differences in salary levels by industry and regions be reflected in compensation criteria?

Industry market data and location cost of living has long influenced pay levels, especially in sectors such as IT, tech, production and life sciences. Employers incorporating industry benchmarks or regional differentials into their pay frameworks must ensure that these factors form part of a broader, documented objective methodology grounded in the Directive’s core criteria (skills, effort, responsibility and working conditions) and other requirements.

The Directive does not prohibit the use of industry market data in evaluation criteria, provided that the benchmarking is applied consistently across all genders and is supported by robust and documented evidence, regularly monitored and updated. At the same time, the Directive requires that employers are not over-relying on such industry data without having full accountability on its direct and indirect effect on pay levels and different groups of employees. For example, where industries were traditionally male dominated, it is not excluded that benchmarking data might be biased and lead indirectly to unequal treatment between salary levels by gender.

The same caution applies to regional cost of living differences: these must be objectively justified and non-biased when used for employees performing comparable roles in different locations within the same country.

Hristina Dzhevlekova (Counsel, Bulgaria)

4. How will the “single source” principle stipulated in the Directive affect complex organisations?

The single source is the common decision-maker or source of governance on the pay topic. A single source may be, for example, the holding company in a multinational group or a collective bargaining agreement applicable to more than one company (affiliated or not).

When referring to the single source principle, the Directive mentions “pay conditions” and “elements of pay” as being attributed to that single source. These terms are not defined, leaving their relationship to other pay‑related terminology under the Directive unclear.

A common misconception is that the single source concept applies only when no appropriate comparator exists within the same employer. In reality, its scope seems to be broader, extending to all equal work and equal value assessments, for example when responding to individual information requests or addressing specific claims.

The core practical question for international groups that centrally determine the remuneration structure for the entire group is whether the “single source” concept in fact intended to regulate cross-countries pay structures and categories.

Adelina Iftime-Blagean (Partner, Romania)

5. What can companies that do not have employee representatives do to comply with the Directive’s requirement that employee representatives should be involved into the elimination of pay gaps?

Employers without employee representatives must ensure that their pay structures comply with the Directive on their own. While the Directive acknowledges the absence of employee representatives in some cases, as the duty to cooperate with them applies “where such representatives exist”, it also suggests that employee representatives should be elected to comply with the Directive. Specifically, employee representatives should be designated for the purpose of joint pay assessments and employees should be able to be represented by a representative of their choice.

However, the Directive provides neither the scope of ad hoc representatives’ powers nor the process for their election. This could be further clarified in national implementation laws or guidance.

Katarina Matulnikova (Partner, Slovakia), Dajana Csongradyova (Senior Associate, Slovakia)

6. What reasons are considered relevant, objective and sufficient to justify a pay gap?

Differences in pay should relate to each particular role and not an individual person. The justification of pay gaps should follow similar logic to that used in the creation of job architecture and comparable positions performing work of equal value. They should refer to the objective and gender-neutral evaluation criteria.

Legitimate justification of pay differences may relate to skills, performance, experience, qualification and working conditions, as well as any other criteria a company identifies as relevant for their business and applies to all employees. Other legitimate differences in pay may arise from external factors such as scarcity of certain skills on the labour market and regional differences in cost of living and labour markets.

On the contrary, pay differences resulting from subjective or historically biased criteria or choices and decisions by or in relation to individual employees will not be valid to justify pay gaps.

Barnabas Buzasi (Counsel, Hungary)

7. How do data protection obligations affect the disclosure of information under the Directive?

Companies must observe GDPR requirements when processing employees’ personal data (for example data regarding their salary levels or category of work) when fulfilling the information obligations imposed by the Directive, including the right to information, reporting on the gender pay gap and joint pay assessments.

The principle of data minimisation (Article 5(1)(c) GDPR) should be applied to such processing activities. For instance, when sharing salary information, employers must ensure, as far as practically possible, that individuals and their individual salary levels cannot be identified. Where the disclosure of salary information would lead to the pay of an individual employee becoming identifiable, Member States may decide that only the workers’ representatives, the labour inspectorate or the equality body shall have access to that information.

Personal data processed for the purpose of fulfilling these obligations under the Directive may not be used for any other purpose. In addition, employers may require workers who have obtained pay information about others to use it solely for exercising their right to equal pay.

Magdalena Ziembicka (Counsel, Austria)

8. What level of detail should the published gender pay gap reports contain?

The purpose of these reports is to provide a sufficiently granular view of pay structures to enable meaningful scrutiny of pay equality across the organisation. Hence the reports that are to be published should go well beyond high-level averages.

Such reports should contain multiple pay gap indicators, not only overall figures. For example, they must include the mean and median gender pay gap in both ordinary basic pay and complementary or variable components (such as bonuses). They also need to provide data on the distribution of men and women across pay quartiles, as well as the gender pay gap between categories of workers performing the same or equal value work, again broken down by both fixed and variable pay components.

Ondrej Benes (Counsel, Czech Republic)

9. What information exactly will employees have the right to request?

All employees can requestc the information on how their pay compares to that of other colleagues, irrespective of the number of employees in the company. They have the right to receive information about their individual pay level and the average pay levels, broken down by gender, for the group of employees performing the same work as them or the work of equal value to theirs.

Employers must provide such information in writing at the latest within two months from the date of the request. If the information received is inaccurate or incomplete, employees have the right, either personally or through their employee representatives, to request additional details and clarifications.

Moreover, the Directive obliges employers to proactively inform employees about their right to information. This should be done annually and indicate how employees can put forward their requests.

Hemma Elsner (Associate, Austria)

10. At what stage of the hiring process should the salary range be disclosed to the candidates?

The Directive provides some room for manoeuvre on salary disclosure in the hiring process, while supporting informed salary negotiations. The employer or a social partner should communicate either the starting salary for the advertised position or a pay range to candidates before the job interview and at the latest before the conclusion of the employment contract. The Directive does not oblige employers to disclose the salary information to the wide public. The employer can include it in the job vacancy notice or convey it directly to the candidate.

Agnieszka Nowak-Blaszczak (Counsel, Poland)

11. From what point in time does the violation of equal pay rights count? Can employees claim compensation retroactively?

The right to compensation already exists. Enhanced pay transparency requirements under the Directive may prompt more historical pay claims.

A violation arises at the moment when unequal pay is applied, not upon the transposition of the Directive, since the obligation of equal pay already existed in EU Member States prior to the Directive. Employees may therefore claim payment of salary differences for prior periods, subject to applicable limitation periods.

While limitation periods are determined at national level, the Directive requires that such periods should be at least three years and should start when the employee becomes (or should reasonably be) aware of the violation.

Teja Balazic-Jerovsek (Partner, Slovenia)

12. Is there a de minimis threshold for pay gap discrimination claims?

No. For individual pay discrimination claims, there is no de minimis threshold. A worker who can demonstrate that they receive lower pay than a comparator of the other sex performing the same work or work of equal value is entitled to challenge that difference regardless of its magnitude. The relevant test is whether the difference exists and whether it can be objectively justified – not whether it exceeds a particular percentage.

However, for participation rights, there is a 5% threshold. Where an employer’s pay reporting reveals a difference of at least 5% between female and male workers and the employer cannot justify or remedy that difference, a joint pay assessment with workers’ representatives must be conducted. This 5% threshold is therefore not a de minimis rule that shields employers from claims. It is a procedural trigger: breaching it activates mandatory corrective processes. Staying below it does not immunise an employer against individual claims or regulatory action.

Ralf Peschek (Partner, Austria)