The EU Pay Transparency Directive (EU) 2023/970, adopted in May 2023, requires all EU Member States to implement its rules by 7 June 2026. While this deadline may seem distant, the Directive introduces significant changes and entails considerable work for employers to ensure that pay structures are based on objective, gender-neutral criteria.
Slow progress and uncertainty
So far, most EU countries have not published draft laws to implement the Directive. This leaves employers, especially multinationals, facing uncertainty, as they are expected to prepare for compliance without clear national guidance.
Core requirements
A key obligation under Article 4 is that pay systems must be based on:
- Skills
- Effort
- Responsibility
- Working conditions
Updating existing pay structures to meet these standards can be challenging, particularly for organisations with complex or decentralised systems.
How are companies preparing?
To understand current readiness, we surveyed HR and legal professionals in large multinational companies across Europe. The results highlight key trends and challenges as organisations work towards compliance.
Read the full Study
We invite you to read our attached A&O Shearman Pay Transparency Readiness Study 2025 for a deeper dive to better understand the state of preparation among our clients and peer companies. If you have any questions or would like to discuss what the EU Pay Transparency Directive could mean for your organisation and how you may want to prepare, our team is here to help.
AO Shearman Pay Transparency Readiness Study 2025 (pdf)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
