The EU Pay Transparency Directive: Why UK Employers Are Wrong to Ignore It

There's a law coming into force on 7th June 2026 at first glance many UK businesses may have thought it's an EU problem and therefore does not apply to them.  Some HR teams may have flagged it upwards, whilst other SME owners may realise this is the first they have heard of it. 

I wanted to cover some of the basic questions HR professionals or employers may have around what this legislation involves, how it is going to have an impact and what UK businesses can do to get ahead of the curve, whether you currently have EU based operations or employees or not.

What is the new legislation?

The EU Pay Transparency Directive introduces new obligations on employers to disclose salaries at the point of recruitment, comply with employee requests for pay data, publish gender pay gap statistics, and face compulsory audits and penalties where unjustified discrepancies come to light. 

For employers with operations/employees within the EU the deadline for implementation is on 7th June 2026.  It applies to public and private sector employers across the EU, and to non-EU employers who have employees based in EU member states.

How does this affect UK businesses?

• If you have employees or operations within the EU - you must make sure you are compliant with the new legislation.   Even if your headquarters are UK-based, hiring managers, recruitment partners and anyone else that may be involved in salary discussions and decisions need to know how this has an impact.

  
  

• If you do not have employees or operations within the EU - there is no UK-wide law forcing employers to abide by the new legislation. Under the new Employment Rights Act changes, however, from 2027 larger UK employers (with more than 250 employees) will be required to produce mandatory gender pay gap action plans, setting out concrete steps to address workplace gender inequalities.

  
  

Where do I start? 

You don't need to overhaul everything at once. But these are the top three things you should be looking at as a starting point; 

1. Revisit your recruitment process. Are you advertising salary ranges? Are your hiring managers still asking candidates what they currently earn? Both practices are under growing scrutiny. Neither will serve you well going forward. 

   
   

2. Review your employment contracts. Pay confidentiality clauses are prohibited under the directive for EU employees and are increasingly difficult to defend more broadly. Check what your contracts that apply to EU-based employees actually say.

   
   

3. Awareness and training for hiring managers.  If you are UK based but hire EU-based employees you will need to make sure your recruitment partners and internal hiring managers are aware that they will be prohibited to ask interviewees about their pay history. 
   

The bigger picture 

When the UK introduced gender pay gap reporting in 2017, it was considered a legislative trailblazer. The EU has now taken a significant leap forward, introducing considerably more demanding requirements.  The UK will look to catch up at some point, but we do not know when. 

The overall aim is to have transparent, fair pay practices allowing businesses to attract better people, reduce legal risk, and hold up under scrutiny in relation to pay. In order to make sure that your people are being paid consistently for doing equivalent work, it is critical to have gender-neutral and objective criteria frameworks for pay and progression. 

If those decisions currently rely on instinct and individual managers, that needs to change.

If you're not sure where your organisation stands, or you know those decisions currently rely on instinct and individual managers and there are gaps you need to rectify but aren't sure where to start, book your discovery call here