Pay Transparency: Where are We Now?
Ireland has until 7 June 2026 to transpose the EU Pay Transparency Directive (the “Directive”). The Directive aims to strengthen the principle of equal pay for equal work through pay transparency measures and stronger enforcement provisions, while also introducing gender pay gap ("GPG") reporting obligations across Europe. The Legislative Programme indicated preparation is underway for the heads of the ‘Pay Transparency Bill’ (the “Bill”), highlighting that efforts are under way to transpose the Directive. Whilst the Bill has not yet been published, employers should start to prepare now for the upcoming changes. Please see the previous article in our ESG series, where we focus on the Proposed Legislation on Pay Transparency and Equality Law Developments.
In this next article in our ESG series, we focus on the right of employees to access pay information which is enshrined in the Directive, and consider what this new right will mean for employers.
Background on the Directive
By way of reminder, the Directive was enacted in response to a 2020 review of the EU’s Equal Treatment Directive which found that the application of the principle of equal pay is hindered by a lack of pay transparency. The EU had found that there was an average gender pay gap of 13% in the EU (with significant variations in Member States) which has decreased only minimally over the last ten years.
The Directive applies to all employers in the EU, with specific provisions applying only to employers of a certain size. For example, the GPG reporting requirements apply to employers with 100 workers or more. The Directive also applies to all workers, including part-time workers, those with fixed-term contracts and agency workers, amongst others.
The Directive will introduce significant pay transparency obligations on all employers, including the above-mentioned GPG reporting requirements, the obligation to conduct a ‘Joint Pay Assessment’ and a prohibition on pay secrecy. The focus of this article is on the right to pay information. For more information on the other requirements under the Directive, please see our article “The Pay Transparency Directive: How Can Employers Prepare.”
What does the right to pay information entail?
Under the Directive, employees will have the right to receive information on their individual pay level and the average pay levels, broken down by sex, for the categories of workers performing the same work as them or work of equal value to theirs.
For the purposes of the Directive, ‘pay level’ means gross annual pay and corresponding gross hourly pay and ‘pay’ includes basic wage or salary and any other consideration (including cash or in kind).
There are a number of requirements and protections involved in the right to pay information which employers must be mindful of, including:
- Time frame: the information must be provided to the requesting employee within a reasonable period of time but no later than within two months of them making the request.
- Format: the employer must be able to provide the information in writing upon request.
- Accessibility: the information provided must be in a format which is accessible to persons with disabilities and which takes into account their particular needs.
- Use of representatives: employees must be able to make these requests through their representatives or through an equality body. It is currently unclear how ‘representatives’ will be defined in the transposing legislation.
- Additional information: if the information received by the employee is inaccurate or incomplete, the employee has the right to request additional and reasonable clarifications and details regarding any of the data provided, and receive a substantial reply.
- Reminders: the employer must inform all employees, annually, of their right to receive pay information and the steps required to exercise this right.
- Use of the information: the employer must not have in place contractual terms restricting workers from disclosing information about their pay. However, employers may require workers who have obtained pay information (other than information about their own pay), not to use that information for any purpose other than to exercise their right to equal pay.
The right to pay information will apply to all employees, regardless of the size of the employer.
Pay setting and pay progression
Employers must also make easily accessible the criteria that are used to determine employees’ pay, pay levels and pay progression. This criteria must be objective and gender neutral.
Members states are permitted to exempt employers with fewer than 50 employees from the obligations related to pay progression. It is currently unclear whether the Bill will permit this exemption.
Work of equal value
A key takeaway from the right to pay information under the Directive is that is applies to ‘categories of workers,’ meaning not only employees performing the same role but also roles of equal value. This entitlement is therefore quite broad, meaning employees can potentially access a substantial amount of information. This may in turn lead to a greater amount of equal pay claims.
As for the meaning of ‘work of equal value,’ the Directive does provide some guidance. It notes that Member States shall ensure analytical tools or methodologies are available and easily accessible to guide the assessment of the value of work. Further, it notes that the value of work should be assessed on the basis of objective, gender-neutral criteria.
Ireland has not yet issued its guidance in relation to the assessment of ‘work of equal value’. The Directive requires consultation with equality bodies, such as the Irish Human Rights and Equality Commission (“IHREC”). IHREC published a non-binding Code of Practice on Equal Pay in March 2022, which contains some guidance on the meaning of ‘equal value’. The Code also provides guidance on how employers can identify and address pay gaps, including conducting pay reviews using objective job evaluation models. We will need to wait to see what updated guidance will be issued in conjunction with the Bill being published and / or enacted.
How can employers prepare?
With less than a year out from the transposition deadline of 7 June 2026, some employers may be more prepared than others. Here are some steps employers can take to ensure that they are prepared for the new requirements:
- Upgrade data systems: Employers should upgrade their data processing and data management systems to ensure they are prepared for requests on pay transparency in the workplace and can respond to requests across various categories of workers within the two month deadline.
- Carry out job-mapping exercises: Employers may wish to start defining categories of employees and mapping out work of equal value, based on the criteria set out in the Directive ie, skills (including soft skills), effort, responsibility and working conditions, and, if appropriate, any other objective gender-neutral factors which are relevant to the specific job or position.
- Be mindful of reminders: The annual reminders of the right to information required of employers could trigger a large volume of requests. Employers should ensure they are equipped for this, and make preparations in advance of sending out these annual reminders.
- Run test cases: Employers may wish to run test cases to tease out how such requests would play out in practice and to identify any potential gaps in their equal pay policies.
- Review pay policies and structures: Employers should review their current pay policies and structures, to ensure that these are fair and will withstand the additional scrutiny that comes with this new right to pay information.
- Train staff: Employers should begin training managers and HR staff to prepare them for handling employees’ requests to pay information under the Directive.
For information on the consequences of non-compliance with the Pay Transparency Directive, please see the following article in our ESG series “The Pay Transparency Directive: How Can Employers Prepare.”
Next steps
Proactive employers should seek to identify and remedy any potential issues with pay transparency in the workplace now to ensure ease of compliance in the future. By following the steps recommended above, employers can ensure a smooth transition when the transposition deadline of 7 June 2026 arrives.
Contact Us
Matheson's Employment, Pensions and Benefits Group is available to guide you through the complexities of navigating the new trends and legal developments in this area.
For more information please contact Employment, Pensions and Benefits partner, Alice Duffy, or your usual contact at Matheson.