If your company operates in the EU, you’re on a countdown clock: by June 7, 2026, the EU Pay Transparency Directive (2023/970) will become law in every member state.
Its purpose sounds noble — equal pay for equal work. But make no mistake: this isn’t a gentle HR initiative. It’s a compliance overhaul that will expose how your company manages pay decisions, data, and fairness.
If you don’t already have a solid performance management system and managers who can confidently lead career conversations, no wonder you’re losing sleep.
Because in 2026, “we didn’t know” won’t be an acceptable answer — and “we can’t explain” will be even worse.
The New Reality
Here’s what’s about to hit:
💬 Salary ranges go public — no more “competitive salary” placeholders. Every job ad or offer process must include a pay range.
🙅 You can’t ask about previous pay — offers must stand on merit, not on what a candidate earned before.
📊 Employees gain legal rights to pay data — any employee can request their own pay and the average pay for equivalent roles, broken down by gender. → If HR can’t produce that within a reasonable time, you’re in violation.
⚖️ Mandatory gender pay gap reporting — typically for companies with 100+ employees. A gap above 5% without objective justification triggers a joint pay assessment with employee representatives — and likely external oversight.
💸 Enforcement with teeth — non-compliance can mean fines from €5,000–€80,000, back pay, legal costs, and significant reputational harm.
The Moment It Gets Real
Imagine this: it’s a normal Tuesday morning. HR opens an email from an employee asking for the average salary for their role — by gender.
It’s a perfectly legal request under the new Directive.
But here’s the real catch — it’s not enough to simply share the numbers.
You’ll also need to explain why someone is in a particular salary range — and how they can move up.
This means your managers must be ready to talk about skills, performance, growth paths, and criteria for progression— clearly and consistently.
If your company doesn’t have these structures in place, the Directive becomes more than a compliance challenge; it’s a leadership challenge.
How CEOs Should Prepare Now
To survive — and thrive — before the Directive takes effect:
✅ Map and document your pay structure. Clear bands, levels, and progression criteria are essential.
✅ Audit your pay data. Identify gaps before regulators or employees do.
✅ Define clear performance metrics. Employees need to know what it takes to move up.
✅ Train managers. They must be able to have transparent, confident conversations about pay and career growth.
✅ Prepare communication plans. Transparency mishandled can still backfire.
And remember: it’s never too late to have someone take a fresh look at your salary and pay structure — we all have blind spots.
Companies that start early will handle this smoothly and turn it into a trust-building opportunity. Those that delay risk employee dissatisfaction, regulatory fines, and public scrutiny.
The Upside
Handled well, the Pay Transparency Directive is more than compliance — it’s a chance to:
- 🚀 Increase trust and engagement with employees
- 🚀 Attract and retain top talent
- 🚀 Strengthen credibility with regulators, investors, and the public
But it’s a process that takes time. June 2026 isn’t far off, and starting now is the difference between being proactive and reactive under pressure.
👉 Need help preparing? We help companies audit pay structures, build transparent frameworks, and coach managers to lead confident career conversations. Make sure your team can not only report pay — but explain it.
#PayTransparency #EUPayDirective #Leadership #PeopleStrategy #HR #Compliance
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