Impact of EU Pay Transparency Directive on Irish Organisations

28/01/2025

What is does Transparency Directive mean for Irish Organisations

Ireland is actively preparing to implement the EU Pay Transparency Directive, which aims to strengthen the enforcement of equal pay for equal work and address gender pay disparities across EU member states. The Directive was introduced in May 2023, and Ireland has until June 7, 2026, to transpose it into national law.

In anticipation of this, Ireland has already taken significant steps by introducing mandatory gender pay gap (GPG) reporting. As of December 2022, organisations with at least 250 employees are required to report their GPG annually. This reporting obligation will extend to organisations with at least 150 employees in 2024 and to those with at least 50 employees in 2025.

However, the EU Directive introduces additional requirements that will necessitate further adjustments to Ireland's existing legal framework. Key provisions of the Directive include:

• Pay Transparency for Job Seekers: Employers must disclose the initial pay or its range for job vacancies and provide clear, gender-neutral criteria for determining pay levels. They are also prohibited from asking applicants about their prior salaries.

• Right to Pay Information for Employees: Employees will have the right to receive information regarding their pay levels and the pay levels of colleagues performing the same or equivalent work, broken down by sex. Employers are obligated to inform all employees annually of this right.

• Gender Pay Gap Reporting: The Directive obliges employers with 100 or more employees to report detailed data on their GPG, including information on pay levels, job classifications, and pay progression. This expands upon Ireland's current reporting obligations.

• Prohibition of Pay Secrecy: Employers will no longer be able to restrict employees from discussing or disclosing their pay for the purpose of enforcing the principle of equal pay.

• Burden of Proof in Pay Discrimination Cases: The burden of proof in cases of alleged pay discrimination will shift from employees to employers, requiring employers to demonstrate compliance with equal pay principles.

What have other EU countries implemented to date

As of January 2025, the transposition of the EU Pay Transparency Directive into national laws among EU member states is progressing at varying rates:

• Belgium: In September 2024, the French Community of Belgium (Fédération Wallonie-Bruxelles) became the first EU jurisdiction to transpose the Directive into law. This legislation includes requirements for annual pay audits and wage structure analyses for employers, with specific obligations based on company size.

• Sweden: In May 2024, Sweden's Ministry of Labor and Employment received an investigative report containing draft legislation to implement the Directive. This draft aims to integrate the Directive's requirements into Sweden's existing pay transparency framework.

• Germany: German officials have announced plans to transpose the Directive by the end of the 2024 legislative session. However, as of now, no draft legislation has been published.

• Poland: On December 5, 2024, the Polish government published a draft of the Directive, marking a step toward its transposition into national law.

What should Irish Employers do to prepare

To align with the new requirements of the EU Pay Transparency Directive, Irish employers should take practical steps to assess and update their pay practices, policies, and workplace culture to promote equality and fairness. These steps should include:

1. Conducting a Comprehensive Job Evaluation:

   • Use a robust job evaluation system to ensure consistency and fairness in evaluating roles.

   • Define clear, objective criteria for assessing job value and establish transparent pay structures.

2. Developing Job Architecture:

   • Create a job architecture framework that categorizes roles based on responsibilities, skills, and experience levels.

   • Use this framework to align pay scales, progression paths, and job grading systems.

3. Reviewing Remuneration Policies:

   • Audit current remuneration practices to identify gaps and inconsistencies in pay across roles and gender.

   • Benchmark pay against industry standards to ensure competitiveness and fairness.

4. Implementing Transparent Progression Arrangements:

   • Define clear criteria for promotions and career progression, ensuring that they are applied consistently.

   • Communicate these criteria to employees and align them with broader organisational goals.

5. Improving Data Collection and Reporting Systems:

   • Establish or upgrade systems to accurately track pay data, job classifications, and workforce demographics.

   • Ensure these systems are capable of generating detailed reports to meet both internal needs and regulatory requirements.

6. Training Managers and HR Teams:

   • Provide training on the principles of equal pay and pay transparency to all managers and HR professionals.

   • Equip them with the tools and knowledge needed to make informed, equitable decisions.

7. Engaging Employees:

   • Foster open communication about pay policies and promote a culture where employees feel comfortable discussing concerns about pay equity.

   • Regularly update employees on initiatives and progress toward pay transparency and fairness goals.

8. Preparing for Pay Gap Reporting:

   • Ensure the organisation is ready to meet reporting obligations, including calculating and explaining gender pay gap data.

   • Develop action plans to address any gaps identified through reporting.

9. Auditing Pay Secrecy Practices:

   • Review and update employment contracts to remove any pay secrecy clauses, ensuring compliance with the Directive.

   • Encourage a culture of openness regarding pay to reinforce trust and transparency.

By taking these measures, Irish employers can effectively address the Directive’s requirements while building a fair and equitable workplace.

At TMHR, we understand the challenges employers face in adapting to the EU Pay Transparency Directive. Our expertise in HR compliance, engagement, and leadership, combined with our practical tools and consultancy services, makes us the ideal partner to guide your organisation through these changes.