From 7 June 2026, all employers in the EU will have to comply with the EU Pay Transparency Directive (PTD). It sets out new legal obligations on employers regarding pay transparency and pay gap reporting. The purpose of the PTD is to enforce the right to equal pay for men and women performing equal work or work of equal value.

UK employers with EU operations will have to comply with the PTD, subject to meeting the relevant thresholds. However, even those without EU operations may find themselves having to comply to keep up with their competitors and industry peers.

In this article, we summarise the key requirements of the PTD, the potential impact for UK employers and what actions they should now be taking.

What are the key requirements of the PTD?

Ban on pay secrecy: Employers cannot prohibit employees from disclosing their pay and benefits to other employees. This includes the prohibition on confidentiality clauses concerning pay in contracts.

Ban on requesting details on previous pay history: Employers cannot ask candidates about their pay history during the recruitment process.

All job vacancies must include the salary range: Prior to any interview, candidates have the right to receive the salary, or a salary within the stated range, for the role they are applying for.

Mandatory gender pay reporting: By 7 June 2027, employers with at least 250 workers must provide their gender pay gap report to the relevant authority and repeat this annually. Employers with at least 150–249 workers must provide the information every three years (this threshold will reduce to employers with 100–149 workers from 2031). In addition:

• Management must confirm the accuracy of the report after consultation with workers’ representatives, who shall have access to the methodologies applied by the employer.
• Management must disclose the report to workers and their representatives. They will also need to ensure that the previous four years’ worth of pay gap data is retained in case it is requested by a worker or the relevant authority responsible for inspecting labour laws.

Joint pay assessments: If an employer’s gender pay gap is at least 5%, and cannot be justified by objective gender-neutral criteria, the employer must undertake a joint pay assessment to identify, remedy and prevent pay differences between female and male workers.

Pay setting and pay progression policies: Employers with 50 or more workers must provide workers with the criteria used to determine workers’ pay, pay levels and pay progression.

Right to request pay transparency information: Workers have the right to request from their employer or through an equality body, information concerning their individual pay level and average pay level, broken down by sex, for categories of workers performing the same work as them or work of equal value to theirs. Such information must be provided within two months of the request. Employers must remind workers annually of their right to receive this information.

Are there penalties for non-compliance?

Yes, but they could differ in each jurisdiction. However, the PTD states that the penalty must include a fine and “carry a real deterrent effect against non-compliance”. What threshold that requires will be subject to each member state, but the expectation is that they will be punitive.

Isn’t this just the same as the UK’s gender pay report regime?

No. The requirements of the PTD go further than the mandatory gender pay gap reporting in the UK. For example:

• Under the PTD, employers must publish the gender pay gap between workers who do the same work or work of equal value. In the UK, there is no obligation to compare workers of different sexes doing the same work or work of equal value.
• For gender pay gap reporting in the UK, non-cash benefits and share incentives are not included. However, the PTD defines pay as “any other consideration, whether in cash or in kind which a worker receives directly or indirectly in respect of his or her employment from his or her employer.” That would indicate forms of compensation beyond salary could be included under the PTD. If so, that would complicate the calculations and provide a skewed picture of the data.
• In the UK, employees have no right to request pay transparency information from their employer.

How does the EU PTD impact UK businesses?

UK businesses with operations in the EU will need to check whether they come within the scope of the PTD and how it will be implemented in each jurisdiction they operate in to avoid any potential fines and claims from workers.

Those UK businesses who have EU employees but don’t have a legal entity in the jurisdiction will still be impacted. The PTD applies to all private and public employers, as well as workers who have an employment contract or an employment relationship in the member state. There is nothing in the PTD which requires the business to have a legal entity or branch in the member state. The mandatory pay gap reporting requirement is limited to employers of a certain size, so it’s unlikely that those who don’t have a legal entity will be caught by it.

Businesses with only UK-based employees may still be impacted by the effects of the PTD. Global organisations are increasingly adopting standard policies across different jurisdictions to ensure there is consistency of treatment and employee experience. That might drive organisations to adopt the same pay transparency principles within the UK, which may force peers and competitors to do the same.

Three steps employers should take now to prepare for 2026

Almost all EU member states are yet to introduce legislation that is compliant with the PTD. Some states already have mandatory pay gap reporting of some kind. However, that will need to be updated to comply with the PTD. It is possible that member states will go further than the requirements of the PTD. As it stands, the PTD is the base level of compliance that employers will need to meet by 7 June 2026.

UK employers with operations in the EU must therefore start taking the following steps to mitigate the risks of non-compliance:

• Mapping out the EU member states in which they employ workers.
• Mapping out where their workers are based so they can establish whether the reporting thresholds are going to be met.
• If the thresholds are going to be met, taking steps to prepare gender pay gap reports in line with the PTD so that they are ready for 7 June 2027 deadline.

If you would like to speak to someone about the EU Pay Transparency Directive, please contact Charlie Barnes.

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