How to Prepare for the EU Pay Transparency Directive by 2026 

Salary talk used to live in whispers. Not anymore. The EU Pay Transparency Directive (2023/970) lands in national law by 7 June 2026, and HR teams will feel it first.

From there, HR teams will work with new ground rules: share salary ranges during hiring, skip salary-history questions, publish clear criteria for pay and progression, and answer pay-information requests within two months. Larger employers will also report gender pay-gap metrics and act when a 5% gap in any worker category can’t be objectively explained.

Why now? Because the gap isn’t shrinking fast enough. In 2023, women in the EU earned on average 12% less per hour than men (for enterprises with 10+ employees), for unadjusted gross hourly earnings. That’s after decades of tinkering with policy, diversity drives, flexible work, and more. So this Directive isn’t just optics. It forces clarity.

It insists “equal value” be judged by something real: the law defines “work of equal value” using skills, effort, responsibility, and working conditions, and it warns against undervaluing so-called “soft” skills.

That’s familiar territory for HR. When your pay bands and promotion paths are built on clearly defined skills and levels that everyone can see, you reduce friction, avoid messy “why-her, not me” questions, and build trust.

Where Nestor fits? We’re your evidence engine.

We supply the foundation: skills-libraries, role-skills profiles with clear proficiency levels, dashboards you can slice by job family or skill cluster to see where gaps show up. (Yes, you still will need legal review, but you’ll have the data backbone.) It means you’re more prepared, less defensive, more confident showing how pay & progression are built.

If you remember anything from what’s coming, let it be this: build your pay structure around skills. Publish how progress happens, not just numbers. Establish a 60-day workflow for pay-info requests. Watch the 5% trigger so you aren’t surprised.

The rest of this article gives you concrete steps, examples, and tools so you can plan your next steps with clarity and maybe even shake off a few long-standing headaches while you’re at it.

What is the EU Pay Transparency Directive (2023/970)?

Think of this Pay Transparency Directive as Europe’s way of saying: no more hiding how pay is set. It’s the first EU-wide law that forces employers to show their cards on pay ranges, criteria for progression, and gender-gap numbers.

At its core, the law enshrines something deceptively simple: equal pay for equal work, or work of equal value. That “value” isn’t about who negotiated better. It’s about skills, effort, responsibility, and working conditions.

Every Member State must write the EU Pay Transparency Directive into national law by 7 June 2026. After that, the obligations bite. Countries may go further, but they can’t go softer than this common floor.

In 2023, the widest hourly gap sat in Latvia (19%), while Luxembourg posted a small negative gap (–0.9%). That spread alone shows why a single, transparent standard matters.

And because HR life doesn’t happen in a vacuum: reporting won’t stop at base pay. Expect attention on variable pay and other components, which means your compensation house needs clean, explainable data, not just a shiny range in the job ad. (We’ll show the exact metrics later.)

Who is in scope?

Everyone hiring in the EU, public or private. Headquarters location doesn’t get you off the hook; if you employ in an EU country, the transparency rights apply. The heavier obligations (gender pay-gap reporting and, in some cases, joint pay assessments) are staggered by headcount:

• 250+ employees: report by 2027, then annually.
• 150–249: report by 2027, then every 3 years.
• 100–149: report by 2031, then every 3 years.

Below 100 staff? You won’t have to file reports, but you still need to follow the rules on pay transparency in recruitment and employee information rights.

In a 2024 survey, only 2% of European companies said they felt fully prepared for the Directive. Around 21% admitted they hadn’t even started planning yet. That gap between legal deadlines and organizational readiness is where HR leaders need to get moving.

What the EU pay transparency directive really means for HR (by workflow)

Hiring: What Goes in Your Job Ads & Process

Let’s start where candidates start: the posting. You’ll need to show the initial pay or a range for the role, share it early (in the ad or before interviews), stop asking for salary history, and keep titles and the process gender-neutral. Add one clean sentence that explains how you set pay—based on objective criteria, not hunches.

A line you can plug into every job ad (tweak the numbers and skills as needed):

• Base range: €58,000–€68,000 per year, based on demonstrated proficiency in [X skills] and scope (role level L4). Progression criteria available on request.

Why the extra sentence? Because employees must have easy access to the criteria you use for pay and progression, and those criteria must be objective and gender-neutral. Write them in plain language and post them where people actually look.

Small tangent that loops back: people share salaries. Screenshots fly through Slack and WhatsApp. A clear range and a short logic statement defuse a lot of noise before it starts.

How Nestor helps: Nestor gives you skills-based role profiles, skills profiles with proficiency levels, and range tags you can attach to each role. That keeps your job ads consistent across markets and helps you keep titles neutral without rewriting every time.

Pay Architecture: Objective & Gender-Neutral by Design

The Directive spells out what “equal value” means: compare work using skills, effort, responsibility, and working conditions and don’t sideline soft skills. Your pay structures should make that comparison possible and fair. That’s the heart of it.

Your move this quarter:

• Retire one-off bands that live in private spreadsheets.
• Build skills-anchored bands with clear levels and transparent progression steps.
• Write short, readable rubrics managers can point to when someone asks, “What gets me from L3 to L4?”

You’ll find that a skills-first structure calms tough conversations. It also makes cross-country talk less messy, because you’re pricing capability, not job title folklore.

How Nestor helps: Use Nestor’s AI skills library (20k+ skills), role-to-skills mapping, and employee skills profiles with levels you can show people. It’s fast to draft ladders and easier to keep them current as roles shift.

Employee Right-To-Information: Set a 60-Day SLA

Workers can ask, in writing, for their own pay and the average pay levels by sex for comparable categories. They can route the request through reps or the equality body. You must tell everyone each year that this right exists, and you need to reply within two months. That clock matters.

Make it boring, in a good way:

• Create a short “How to request pay information” page.
• Add a simple form.
• Store responses and templates so answers are consistent across teams and countries.

A small note on privacy: Member States can channel some disclosures through reps or authorities if individual pay might be revealed. Keep that in mind when you design your workflow and templates.

Pay-Gap Reporting: the 7 Metrics You’ll Need

Once you hit the thresholds, reporting kicks in. You’ll publish seven items:

1. the gender pay gap,
2. the gap in variable pay,
3. the median gender pay gap,
4. the median gap in variable pay,
5. the share of women/men receiving variable pay,
6. the female/male share in each quartile pay band, and
7. the gender pay gap by categories of workers, split by base and variable.

Cadence depends on size:

• 250+: first report by 7 June 2027, then annually.
• 150–249: 7 June 2027, then every 3 years.
• 100–149: 7 June 2031, then every 3 years.

Management confirms accuracy, and worker reps can see your methodologies.

Quick aside for HR ops: this isn’t only base pay. The Directive treats complementary/variable components as part of pay (bonuses, allowances, etc.). Make sure your data model handles those pieces cleanly so you don’t end up with missing columns two days before sign-off.

The 5% Joint Pay Assessment (JPA): What’s in the Pack

If your reporting shows a ≥5% average gap in any category of workers, you can’t justify it with objective, gender-neutral reasons, and it’s still not fixed within six months after you file, you must run a Joint Pay Assessment with worker reps. That’s non-negotiable.

Your JPA must cover, at minimum:

• the female/male split in each category,
• average pay (base + variable) for women and men per category,
• the differences and reasons (if any) using objective, gender-neutral criteria,
• whether returners from maternity/paternity/parental/carer leave benefited from pay improvements,
• measures to close unjustified gaps, and
• how previous measures worked.

You’ll share it with employees and submit it to the national monitoring body; authorities can also ask for it.

One more point, because it saves pain later: your categories of workers must be defined in a way that reflects “equal value.” Grouping only by job title can mislead. Grouping by skills and level, with clear factors for responsibility and conditions, holds up better when someone asks “why.”

The 90-day plan (simple, punchy, get-it-done)

Deadlines have a way of creeping up, and 2026 isn’t as far away as it sounds. HR teams can’t just hope the EU Pay Transparency Directive will be simple to swallow. They need a plan that breaks the work into pieces small enough to handle but big enough to matter.

Ninety days is enough to set the foundation: the right data model, the first set of categories, and a pay logic that managers can explain without squirming.

Think of it less like a massive “project” and more like building rhythm. Three sprints. Each one adds a layer: diagnose what you’ve really got, design rules people can actually read, and deploy the workflows that keep you compliant without drama.

It’s structured, but not rigid. And because everything ties back to skills and levels, you’re creating a pay architecture that can hold its own when employees, unions, or regulators start asking questions.

Days 1–30: Diagnose (what’s true right now)

1) Map work to skills and levels.

List your roles. For each, name the core skills that actually drive outcomes, plus the expected proficiency at each level. Keep it short and human. This is the backbone for “equal value” comparisons in the Directive so write what you can defend.

2) Draft clean, gender-neutral job titles and pay logic.

Fix titles that carry hidden bias. Add a one-liner you’ll reuse in every posting: pay is based on demonstrated skills and the scope of the level. The Directive expects ranges and objective criteria that people can actually see.

3) Inventory your compensation data.

Pull base pay, variable pay, FTE, location, contract type, manager, role, level, and effective dates. Make sure variable components are there. The law treats pay as base plus complements. No missing columns now means fewer headaches later.

4) Sketch your “categories of workers.”

Group roles that do the same work or work of equal value. Don’t rely on title alone; use skills + level and note conditions (e.g. shift work). These categories drive both equal-pay checks and, later, reporting and the joint pay assessment.

5) Run a dry-scan for risk.

Look at simple gap indicators by category. Set early alerts at 3–4% so you investigate before the 5% trigger becomes real. The Directive’s joint pay assessment kicks in at ≥5% if you can’t justify it and it’s still not fixed after six months.

Deliverables by Day 30

• Role → ESCO-based skills profiles and level ladders (working draft)
• Neutral titles list + pay-logic one-liner for job ads
• Clean pay dataset (base + variable) with owners named
• First pass at “categories of workers” and a simple gap view

How Nestor helps

Use Nestor’s ESCO-based AI skills library to map roles, set proficiency levels, and publish readable skills profiles. Then attach range tags to roles so your job ads stay consistent across markets. Nestor’s Skills Intelligence can give you a quick cut by job family or skill cluster for that early risk scan.

Days 31–60: Design (make it real and visible)

6) Finalize pay bands tied to level.

Set the band per role+level, not per person. Write short progression rules: “From L3 to L4: consistent L3 outcomes + proficiency in X and Y.” This satisfies the Directive’s call for objective, gender-neutral criteria and makes manager conversations sane.

7) Standardize job ads and the hiring flow.

Post the initial pay or range in the ad (or share it before interviews), keep the process non-discriminatory, and don’t ask salary history. Drop the one-liner about pay logic into every posting. It reads well and keeps you covered.

Example line you can reuse

• Base range: €58,000–€68,000 per year, based on demonstrated proficiency in [X skills] and scope at level L4. Progression criteria available on request.

8) Build the right-to-information workflow.

Employees can ask for their pay and the average pay levels by sex for comparable categories. You must tell them about this once a year and answer within two months. Create a short explainer page, a simple form, and a response template now.

9) Draft your Article-9 report structure.

You’ll need seven items when you hit the thresholds: overall and median gaps (total and variable), share of women/men receiving variable pay, quartiles, and gaps by category of workers. Set fields and formulas now, not two days before the deadline.

Deliverables by Day 60

• Signed-off bands and progression rules per role+level
• Job-ad templates with ranges + neutral titles
• Right-to-information SOP, form, and reply template (60-day SLA baked in)
• Article-9 reporting mock-up with live data fields

How Nestor helps

Attach ranges to role+level in Nestor, publish the ESCO-based profiles, and generate ad snippets from the same source of truth. Set up category-of-workers views and export packs that answer information requests the same way every time.

Days 61–90: Deploy (practice once, then set the rhythm)

10) Run a full rehearsal.

Post a few roles with ranges, answer a staged information request, and produce a mock Article-9 report. Treat it like a fire drill. You’ll spot gaps in minutes: missing variable pay, odd categories, or a wonky title.

11) Close easy gaps fast; document the rest.

Where the dry-run shows differences, fix quick wins (mis-leveled roles, stale bands). For anything that stands, keep objective, gender-neutral notes. If a category sits near 5%, schedule a check-in at the three-month mark so you don’t stumble into the joint pay assessment window.

12) Publish what people need to see.

• A short, plain page: how pay is set and how progression works
• The how-to request pay information page and form
• Job-ad templates for hiring teams (with that one-liner)

13) Set the calendar and owners.

• Annual notice to staff about the right to information (HR Comms)
• Reporting cadence by size: 250+ report from 7 June 2027 (then yearly), 150–249 from 7 June 2027 (every 3 years), 100–149 from 7 June 2031 (every 3 years). Lock the dates; back-plan your data cuts.

Deliverables by Day 90

• Live skills-based job architecture (roles, ESCO skills, levels, bands)
• Hiring kit in use (ranges + neutral titles + logic line)
• Information-request workflow live, with a first answered ticket
• Mock Article-9 pack and a mini “JPA kit” ready if the 5% tripwire hits

Light housekeeping that saves you later (keep after Day 90)

• Version notes. When you change a band, add a one-line reason and the date.
• Two-country check. If you hire in more than one EU state, track local twists as transposition laws roll out.
• Manager enablement. Give managers a two-page explainer. Ranges, progression, how to answer “why.”

Penalties and Enforcement

The EU Pay Transparency Directive is not limited to guidance. It obliges Member States to establish enforcement systems that make non-compliance costly and highly visible.

Financial sanctions

• Fines are mandatory. Each Member State must provide penalties that are effective, proportionate, and dissuasive. Levels differ nationally, but recurring breaches must trigger harsher sanctions.
• Public procurement exclusion. Companies that fail on transparency duties, or that maintain an unexplained pay gap of more than 5% in any worker category, can be excluded from tenders. States are also encouraged to insert penalty or termination clauses into public contracts.

Compensation for workers

• Full redress. Employees are entitled to comprehensive compensation covering lost pay, bonuses, in-kind benefits, interest, lost opportunities, and non-material damage.
• No ceiling. The Directive prohibits setting an upper limit on compensation. Awards must reflect the actual harm suffered.

Procedural obligations

• Burden of proof. Once a worker presents facts suggesting discrimination, the employer must demonstrate compliance. Failure to apply transparency duties accelerates this shift, unless the breach is clearly minor and unintentional.
• Access to evidence. Courts and equality bodies may order disclosure of relevant pay data, even if confidential, subject to safeguards. Employers without structured documentation face significant risk.
• Court orders and recurring penalties. Authorities can require corrective measures—such as revising pay systems or publishing criteria—and impose recurring penalties until compliance is achieved.

Litigation environment

• Legal costs. Courts may decide that unsuccessful claimants with reasonable grounds should not bear the employer’s costs, lowering the barrier to bringing claims.
• Limitation periods. Workers must have at least three years to initiate proceedings, starting when they could reasonably have become aware of a breach.

National implementation

Exact amounts and processes will vary. For instance, Finland has proposed fines ranging from €5,000 to €80,000 for breaches linked to reporting and transparency obligations. This illustrates the expected scale: penalties will be significant enough to alter employer behaviour.

How Nestor supports your compliance journey

Software won’t write your policy or sit in a tense meeting. But it can give you clean evidence, shared language, and repeatable steps, so you walk in calm. That’s where Nestor earns its keep.

Nestor runs on a skills engine grounded in ESCO, then layers role profiles, proficiency levels, and analytics on top. So the way you describe work — skills, levels, scope — stays the same across jobs and countries. That consistency is half the battle.

What Nestor is (and isn’t)

• Not a legal handbook.
• Is your skills backbone: roles, levels, and evidence you can show with a straight face.
• Built on ESCO, so your skills language matches what Europe already speaks.

Core building blocks you’ll actually use

• ESCO-based AI skills library → Consistent names for what work requires.
• Role → skills profiles with proficiency levels → People see what “good” looks like at L2, L3, L4.
• Skills Intelligence dashboards → Slice by job family or skill cluster in seconds.
• Categories of workers views → Groups defined by skills and level, not vague titles.
• Clean exports → Reports and request packs that look the same every time.

How this maps to the Directive

Hiring

• You need: pay range in the posting (or before interviews), gender-neutral titles, no salary-history questions.
• With Nestor: reuse skills-based role profiles and range tags. Ads stay consistent; titles stay neutral. Add one honest line on how pay’s set: skills shown + scope at the level.

Pay architecture

• You need: objective criteria that weigh skills, effort, responsibility, and conditions, with soft skills not sidelined.
• With Nestor: publish skills profiles and proficiency rubrics. Managers can point to the same ladder. Employees can see what moves them up.

Employee right-to-information (60-day clock)

• You need: the person’s pay level + average pay by sex for comparable categories; yearly reminder; a reply within two months.
• With Nestor: use categories of workers (skills + level) and export the same fields each time. Consistent, quick, boring—in a good way.

Quick wins you can ship this week

• Tag your top 20 roles with ESCO skills and levels.
• Add the range line and pay-logic sentence to new job ads.
• Stand up a request form and a simple response template.
• Run a mock report on one business unit to test data shape.
• Set an alert at 3–4% gaps by category so you don’t meet the 5% line by surprise.

Guardrails

• Data in, truth out. Capture base and variable pay cleanly. Sloppy inputs create noisy debates.
• Managers matter. Give them the profiles and rubrics. They carry the message.
• Legal still reviews. Nestor brings evidence and structure; counsel brings the green light.

Final Thoughts on the EU Pay Transparency Directive

The EU Pay Transparency Directive is not about adding another layer of bureaucracy. It’s about reshaping how organisations explain, document, and defend the value they place on work. From job postings to pay-gap reports, the Directive insists on clarity, consistency, and evidence.

The most durable way to meet those demands is through a skills-based architecture. Pay ranges, progression criteria, and categories of workers all become defensible when they rest on a shared skills framework rather than legacy titles or subjective judgment. It reduces friction inside the organisation and creates a language that regulators, employees, and works councils can all recognize.

Nestor provides that foundation. Its ESCO-based skills library, role profiles with proficiency levels, and reporting dashboards give HR teams the data model and the exports they need—whether to publish pay ranges, respond to information requests, or prepare a joint pay assessment.

It does not replace legal advice, but it equips you with evidence and structure so compliance is not an annual scramble but a continuous practice.

As 2026 approaches, the practical question is not whether the Directive applies, but how prepared you will be when it does. Organisations that act now will be ready to demonstrate compliance and, more importantly, to build a pay system that employees can trust.

Frequently Asked Questions About the EU Pay Transparency Directive

What is EU Pay Transparency Directive 2023/970 in one sentence?

Directive (EU) 2023/970 is the European Union’s pay transparency law designed to enforce the principle of equal pay for equal work or work of equal value. It requires employers to publish salary ranges in job ads, make pay criteria transparent, grant employees the right to request pay data, and—above certain headcounts, report gender pay gaps and act when unjustified differences persist.

When do companies need to be ready?

Member States must translate the EU Pay Transparency Directive into national law by 7 June 2026; your duties kick in as each country’s law takes effect, with first gender pay-gap reports due from June 2027 (staggered by size).

Does it apply if our HQ is outside the EU?

Yes. The law applies to any organisation employing people within the EU, regardless of where the headquarters is located. If you have subsidiaries, branches, or even a small team in an EU Member State, those operations must comply fully with national rules derived from the Directive. Global companies hiring in Europe need to prepare EU-compliant processes alongside their global HR policies.

Do we have to show salary ranges in job ads?

Yes. Share the initial pay or a range in the posting or before interviews; job titles must be gender-neutral, and you can’t ask salary history.

What counts as “work of equal value”?

Roles are compared on skills, effort, responsibility, and working conditions, not on who negotiates louder; soft skills should not be undervalued.

What must employees be able to request, and how fast do we answer?

On request, you must share the person’s own pay and the average pay levels by sex for comparable categories; inform staff yearly about this right and respond within two months.

What triggers a Joint Pay Assessment (JPA)?

If reporting reveals an average gender pay gap of 5% or more within any category of workers, and the gap cannot be justified by objective, gender-neutral criteria, and is not corrected within six months, the employer must conduct a Joint Pay Assessment with employee representatives. The JPA analyses pay structures, identifies reasons for gaps, and sets out corrective measures.

What are the penalties if we ignore this?

Penalties vary by country, but Member States must ensure they are significant enough to deter breaches. Sanctions may include fines, exclusion from public contracts, and recurring penalty payments until compliance is restored. Workers are entitled to full compensation without any cap, covering back pay, bonuses, interest, and non-material damage. Courts can also shift the burden of proof to employers and order disclosure of relevant pay data.

Does the Directive require publishing individual salaries?

No. Employers are not required to disclose personal salaries publicly. Employees may request their own pay level and aggregated averages by sex for comparable categories of workers, while public reports present data at the company or category level. The Directive balances transparency with data protection by focusing on group comparisons rather than naming individual salaries.

Where does Nestor help?

Nestor provides the data backbone that makes compliance practical. Its ESCO-based skills library ensures consistency across countries; role-to-skills profiles with proficiency levels create transparent pay criteria. Nestor does not replace legal advice but provides the structured evidence employers need to demonstrate compliance confidently.