From the Payscale webinar: “EU pay transparency directive here. What HR leaders must do before it’s too late.” Check it out on demand.
In our recent webinar, hundreds of HR leaders, compensation professionals, and legal practitioners joined Payscale to get clarity on one of the most complex pieces of pay legislation in recent history: the EU Pay Transparency Directive (EUPTD).
The session was led by Ruth Thomas, Chief Compensation Strategist at Payscale and a long-time observer of pay equity legislation globally. She was joined by two practitioners at the forefront of advising companies in Europe: Henrike von Platen, CEO and Founder of the Fair Pay Innovation Lab, a nonprofit dedicated to closing pay gaps worldwide through research, certification, and advocacy and Lucye Provera, who leads Fair Pay for Mercer across Europe and the UK, helping organizations build end-to-end pay transparency programs that meet compliance requirements while strengthening business performance.
The live Q&A generated dozens of sharp, specific questions, many of which we weren’t able to fully address in the session. This post gathers the most important and widely shared questions and pairs them with answers informed by our expert panel. Whether you’re just getting started or deep in your compliance journey, consider this your go-to reference.
Note: This content reflects general guidance and should not be considered legal advice. Always consult qualified counsel for country-specific obligations.
Your questions, answered
Scope & applicability
When June 7th hits, can employees in all EU countries immediately request their pay range and the average pay of others in their role?
Not immediately. June 7, 2026 is the deadline for EU member states to transpose the directive into national law, not the date employees gain enforceable rights. Until a country passes its own implementing legislation, employers in that country are not legally obligated to respond to right-to-information requests
That said, the European Commission has made clear there will be no stop-clock on the directive itself. Countries that miss the deadline are simply late, not exempt. Employees can technically pursue claims against the member state for failing to transpose but the obligation sits with governments, not employers, at this stage.
The right-to-information requirements (Article 7) only apply to employees once local legislation goes live in their country. Check Payscale’s Pay Legislation Tracker for country-by-country status.
Does the directive apply to us if we’re a US company with only 50 employees in the EU, even though our global headcount exceeds 150?
The employee count thresholds relate specifically to the pay gap reporting requirements, not to the pay transparency obligations. The pay transparency requirements (salary disclosure, right to information, pay criteria communication) apply to any employer with EU-based employees, regardless of headcount.
The threshold is also measured at the legal entity level within each country, not across the entire EU or globally (with limited expectations such as Italy, where country-level reporting may be permissible).
If you have even one employee in an EU country, the pay transparency provisions apply to you. The size thresholds only affect pay gap reporting and frequency and timing.
We use an Employer of Record for our two EU-based employees and don’t reach 150 globally. Do we still need to comply?
This scenario has nuance that depends on local law and your EOR arrangement. Generally speaking, if the legal employer of record is the EOR rather than your company, the EOR may carry the compliance obligation. However, the transparency requirements tied to job postings, pay criteria communication, and the right to information often apply regardless of company size.
We strongly recommend consulting legal counsel in each country where your EOR employees are located to clarify who holds the compliance obligation and what disclosures are expected in your specific arrangement.
Does the directive apply to US employees on assignment in an EU country (for example, a US employee working in Germany)?
International assignees are a genuine complexity under the directive. For short-term assignments, national legislation generally applies in the host country, meaning an assignee working in Germany would typically fall under German law for the duration of their assignment.
For pay gap reporting purposes, the guidance is to follow local national legislation in terms of which employees to include. An assignee following a “shadow payroll” or home-country compensation structure may be treated differently from local hires. This is an area where legal review country by country is especially important.
What about Switzerland or the UK? Does the directive affect companies headquartered outside the EU?
The EUPTD applies based on where employees work, not where the company is headquartered. If you have employees physically working in EU member states, those employees — and those employee relationships — are subject to the directive once it’s transposed locally.
Switzerland is not an EU member, so the directive does not apply there directly, but does have its own Pay Gap Reporting. The UK left the EU and is also not bound by the directive, though the UK has its own existing gender pay gap reporting requirements, and future UK legislation could align more closely.
Does the directive cover contractors and freelancers, or only direct employees?
The directive is primarily aimed at employment relationships — workers who are employees or engaged through employment contracts. True independent contractors and freelancers in a business-to-business arrangement are generally not covered.
That said, the exact boundary between “worker” and “contractor” varies by country, and some EU member states may interpret the scope more broadly in their transposing legislation. If contractors perform work integral to your business in the EU, it’s worth reviewing their classification.
Pay definition & reporting
What counts as “pay” under the directive? Is it just base salary, or does it include bonuses and benefits?
The directive defines “pay” broadly as total remuneration — meaning it includes base salary, any complimentary or variable pay (bonuses, commissions, overtime), and benefits (monetary and non-monetary). This is one of the most operationally complex aspects of compliance.
A useful rule of thumb from our panel: if it appears on the pay slip, include it.
Exceptions tend to be things like meal vouchers or items that are uniform and non-discriminatory. Benefits that vary by personal circumstances (ex: pensions that scale with age or family size) need careful evaluation — their inclusion and method of valuation will matter for reporting.
- Discretionary bonuses: Generally included; the criteria for awarding them must be documented and justified.
- Benefits that vary by personal factor: Included, but method of valuation in the analysis varies.
- Truly uniform items (ex: the same health plan for everyone at the same cost): May be excluded in some countries’ implementing legislation.
How will the 5% pay gap threshold be evaluated by job title, level, or some other grouping?
The 5% threshold refers to the gender pay gap between women and men within a defined "category of workers." Under the EU Pay Transparency Directive, employers must report and assess pay differences within these categories and determine whether any gap above 5% can be objectively justified.
The threshold applies at the level of "categories of workers" — a defined group of employees performing the same work or work of equal value. The directive does not prescribe a single methodology, but the categories must be established using gender-neutral criteria such as skills, effort, responsibility, and working conditions.
One challenge many organizations face is that two roles at the same level (for example, P1) can have very different market values depending on function. A software engineer and a junior analyst may sit at the same grade but command significantly different pay in the external market. Documenting the rationale for those differences using objective, non-gendered criteria is what positions employers to defend a pay gap above 5%.
If your pay gap within a category of workers exceeds 5% and cannot be objectively justified and is not rectified within six months, you’ll be required to undergo a joint pay assessment with employee representatives.
Is the pay gap reporting at country level or EU-wide? And does our global headcount count toward the threshold?
Pay gap reporting is done at the legal entity level within each country — not across the EU, and not based on global headcount. If you have employees in five EU countries, you may need five separate reporting exercises once each country's legislation is in effect.
The employee thresholds for reporting frequency are also measured at the legal entity level in each country. Italy is a known exception where country-level consolidation may be permitted.
Does reporting include only current employees, or is there a lookback period covering former employees?
The Directive's reporting requirements focus on current pay data for current employees — it is not structured as a retrospective audit of former employees or historical pay decisions. Compliance obligations run from the effective date of local legislation forward.
That said, the right-to-information requests (Article 7) and any resulting pay equity claims can relate to past pay decisions, as employees may seek to challenge historical pay inequities. Strong documentation of pay decision criteria — going back several years — will be important for defending against such claims.
Right to information (article 7)
Under Article 7, what exactly does an employee have the right to request? Is it just their role's data or something broader?
Under Article 7, employees have the right to request:
- Their own individual pay level
- The average pay levels, broken down by gender, for workers in the same "category of workers" (i.e., the same work or work of equal value)
- The objective criteria used to determine pay and pay progression
The Directive states that employers must respond within 60 days. The information must be provided in writing, clearly and comprehensibly. It applies to the employee's role as defined by the category-of-workers grouping — not to the entire organization's pay data. Note that individual countries may have different requirements.
How should we handle right-to-information requests when the comparable group is very small — say, only 2–3 employees?
Small group sizes are one of the most operationally thorny challenges under the directive, and there's no single clean answer yet. The tension is that disclosing average pay for a group of two or three employees could effectively reveal individual salaries, creating GDPR privacy concerns.
Approaches organizations are exploring include:
- Ensuring your groups are not too narrow and include all jobs of equal value.
- Working with legal counsel to determine what constitutes a permissible disclosure threshold in the applicable countries implementing legislation
The tension between GDPR privacy obligations and the right-to-information requirements is actively being worked through in national legislation. Monitor local rules closely as countries finalize their implementation.
If an employee in Poland requests their cohort data and all comparable peers are in Germany (where pay is higher), do we provide that cross-country comparison?
The right-to-information request is designed to operate at the legal entity and country level, not across EU-wide operations. An employee in Poland would receive comparative data from their Polish entity, not from a German legal entity.
Work of equal value & job architecture
How do we define "work of equal value"? Can we use our existing compensation bands as a proxy for equal-value groupings?
"Work of equal value" is determined by evaluating roles against gender-neutral criteria: skills, effort, responsibility, and working conditions. This is a broader definition than "same job title" or even "same grade" — two different roles at the same level could be considered of equal value if they score similarly against these criteria.
Using compensation bands as a proxy is a reasonable starting point if your bands were built using a structured, documented job evaluation methodology (such as systems like IPE or GGS). The defensibility of band-based groupings comes from the quality of the job evaluation logic behind them — not the bands themselves.
If your bands are based purely on market data without a gender-neutral evaluation, they may not satisfy the Directive's requirement for a methodology that can be audited and explained to employees.
Best practice: use a gender-neutral, point-based job evaluation system. This is the most defensible approach under the directive and what most leading organizations are implementing.
Our Germany office says they don't need to prepare because the directive isn't a law yet there. How do we respond?
Germany's delay in transposing the directive is a legal and political complexity issue — not a signal that it won't arrive. Discussions with the German ministry confirm that the framework coming will largely mirror the EU directive, with very few surprises.
The risk of waiting is significant: job architecture reviews, pay equity audits, and data infrastructure improvements all take time — often 12–24 months for large organizations. Companies that wait for final German legislation will face a compressed, reactive timeline with far less room for thoughtful decisions.
The direction of pay transparency is clear and irreversible. Use the delay as an opportunity to build strong foundations — job evaluation methodology, pay policy documentation, HRIS data quality — so you can adapt quickly once German law is finalized.
Implementation & strategy
What do we report when a country hasn't yet transposed the directive — are we in a legal gray area?
This is genuinely a gray area for employers operating in countries that have not yet passed transposing legislation. In those countries, the directive is not yet directly enforceable against employers. Reporting obligations, right-to-information response timelines, and similar requirements only activate once national law goes live.
However, "not yet enforceable" is different from "no preparation needed." Good pay practices — transparent criteria, documented decisions, reliable data — should be built now so that when national law does land, compliance is a matter of flipping a switch rather than building from scratch.
What are the biggest practical challenges organizations are facing right now?
Based on Mercer's research and Payscale's client work, the most consistently difficult areas are:
- Defining "worker categories" in a legally defensible way — even organizations with robust job architectures are struggling with this
- Data infrastructure — many companies have 3–4 separate HR, payroll, and benefits systems that don't connect, making it hard to assemble total reward data needed for reporting and right-to-information responses
- Variable and complementary pay — documenting and justifying differences in bonuses, commissions, and flexible benefits across comparable roles is where most pay gap risk lives
- GDPR vs. transparency tensions — particularly with small employee groups where average pay data could identify individuals
- Internal communications — managing employee expectations, manager readiness, and messaging across countries with different timelines
What's the panelists' view on where organizations will be on equal pay in five years?
The panelists agreed that significant progress is possible over the next five years, but only if organizations move beyond compliance and take action on the data they uncover.
Henrike von Platen argued that the tools and methodologies needed to identify and address pay gaps already exist. In her view, the challenge isn't figuring out how to achieve pay equity—it's making it a business priority.
Lucye Provera expects the conversation to broaden beyond equal pay for equal work. As organizations mature their approaches, she'll be watching how they address equity across the full employee experience, including career progression, access to opportunities, and total rewards.
Ruth Thomas pointed to lessons from the UK's gender pay gap reporting requirements. Organizations that used reporting as a starting point for ongoing analysis and action made more progress than those that treated it as a compliance exercise. She expects a similar pattern to emerge across Europe as reporting becomes routine and organizations build processes around the data.
Ready to build your pay transparency foundation?
Payscale helps compensation and HR teams navigate pay equity, job architecture, and pay transparency legislation — including the EU Pay Transparency Directive. Our partnership with Trusaic brings specialized compliance expertise together with Payscale's compensation data and technology.
