LEGAL SUMMARY
ON THE PAY TRANSPARENCY DIRECTIVE
DIRECTIVE (EU) 2023/970 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 10 May 2023
to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms (“the Directive”)
INTRODUCTION
This information note attempts to present the goals to be achieved at EU level and the main actions companies can expect to need to take based on the Directive, although the specific Hungarian implementing law is not yet known. Further detailed rules are expected after the Directive is transposed into national law. We now present key terms arising in application, the main expectations of employers, and finally measures companies can already take in our view. The following is a general, non-exhaustive summary of the Directive and does not constitute legal advice in any particular case.
Lack of directly applicable law — transposition deadline
The Directive provides guidance to Member States but is not directly applicable as law. EU Member States, including Hungary, must transpose the EU Pay Transparency Directive into national law by 7 June 2026, i.e., enact a binding law by that date. To date no Member State has fully implemented the Directive. Hungary and Luxembourg are the only Member States that have not yet published even a draft or concept for entry into force[1].
MAIN OBJECTIVES
Primarily to eliminate pay differences between genders that cannot be justified by objective criteria and to establish related transparency, but it also contains general transparency measures, especially for job applicants prior to employment and regarding pay-setting principles.
Strengthen the application of the equal pay principle for the same or equivalent work by eliminating direct and indirect pay discrimination. This does not preclude employers from paying differently for the same or work of equal value where differences are justified by objective, gender-neutral, and non-discriminatory criteria — for example performance and competence.
To protect workers and address fear of victimization when enforcing equal pay, workers must be allowed to be represented. Such representatives may be trade unions or other employee representatives. If there are no employee representatives, workers must be allowed to be represented by a representative of their choice.
Establish pay structures that ensure equal pay for the same or work of equal value. Such pay structures must allow comparison of the value of different jobs within the same organizational structure.
Job applicants should be able to learn the pay or the pay range applicable to the position when applying.
Workers should be able to request information about their pay compared to colleagues performing similar roles or work of equal value (this is not limited to gender breakdowns).
Pay-setting and promotion criteria must be clear and gender-neutral.
WHO IS A WORKER, WHAT IS REMUNERATION, WHAT IS COMPARED?
Personal scope on the worker side: all workers, including part-time workers, fixed-term contract workers, and agency workers, as well as workers in senior positions who have employment contracts and/or employment relationships, taking into account case law (actual worker, disguised employment). The determination of the existence of an employment relationship should be based on factual elements of actual work performed, not on how the parties label the relationship. The Directive therefore also applies to job applicants.
Remuneration: the ordinary basic salary and any other benefits that a worker receives from their employer directly or indirectly (as fixed or variable components), in cash or in kind, by virtue of the employment relationship — e.g., bonuses, overtime compensation, travel allowances, housing and meal allowances, training allowances, severance pay, statutory sick pay, statutory allowances, and employer pension schemes.
Concept of work of equal value as the central element of comparability: To facilitate application of the concept of work of equal value, the objective criteria to be applied must include these four factors: skills, effort, responsibility, and working conditions. Because not all factors are equally relevant for a given post, the employer must weight each factor depending on its relevance to the job or role. Additional criteria may be considered if relevant and justified.
MAIN REQUIREMENTS OF THE DIRECTIVE
A pay structure that ensures there are no gender-based pay differences among workers doing the same or work of equal value that cannot be justified by objective, gender-neutral criteria (Article 4).
Pay transparency for job applicants, gender-neutral job advertisements (Article 5)
If information about the planned pay range for a position is not available, it creates information asymmetry and limits applicants’ bargaining power. When applying for a job, applicants should not have to guess the pay. The Directive requires employers to share either the starting salary or the pay range before the interview. This can be provided directly in the job advertisement or in communications with the candidate. Employers are prohibited from asking applicants about their past pay (salary history ban). This prevents past inequalities from being carried into new employment and ensures negotiations are based on the value of the position rather than the candidate’s past salary.
Employers must ensure job advertisements and job titles are gender-neutral.
Transparency in pay-setting and promotion (Article 6)
Once someone joins a company, they have the right to know how their pay is determined and how it can increase over time. The Directive requires employers to make their pay structures clear and accessible. Criteria related to pay progression can include, inter alia, individual performance, skills development and seniority. Pay-setting and promotion criteria must be objective and gender-neutral. Practically, this means pay policies can no longer be hidden in closed HR files; employees must be able to see and understand the rules affecting their income.
Workers’ right to information concerning their pay level (Article 7)
Workers will have the right to request information about their own pay level and the average pay of colleagues in similar roles or performing work of equal value. Employers must provide this information within a reasonable time, no later than two months from the request. Workers must not suffer detriment for requesting information, and employers cannot oblige them to keep pay information confidential. This right enables employees to surface unfair differences and hold employers accountable. Workers must also be able to receive the information via their employee representatives. Employers must inform workers annually of this right and the steps to exercise it.
Reporting of gender pay gaps (Article 9)
For larger employers, transparency goes beyond individual requests. Employers with at least 100 employees must regularly report on pay under the Directive’s requirements. Member State authorities must publish this information in an appropriate and transparent manner. Employers may publish these reports on their website or otherwise make them publicly available, for example in management reports. Reports must include, among other things, average and median pay gaps, differences in variable remuneration, and the proportion of female and male workers in each quartile pay band. Companies with more than 250 employees publish annually, while those with 150–249 employees report every three years, both types from 7 June 2027. From 2031, the three-year reporting obligation will extend to companies with 100–149 employees.
Joint pay assessments (Article 10)
A joint pay assessment must be carried out where employers and relevant employee representatives disagree whether an average pay gap of at least 5% between female and male workers in a given employee category can be justified by objective and gender-neutral factors, where the employer does not provide such a justification, or where the employer has not remedied such a gap within six months after filing the pay report. Employers must carry out the joint pay assessment together with employee representatives. If there are no employee representatives, workers must appoint representatives for the purpose of the joint pay assessments. The joint pay assessment should lead, within a reasonable timeframe, to elimination of gender-based pay discrimination by adopting corrective measures. The aim is not only analysis but also implementation of real solutions.
These requirements work together to ensure pay practices are open, fair and justifiable from application to career progression.
POSSIBLE CURRENT EMPLOYER ACTIONS BASED ON THE DIRECTIVE
1. Define and strengthen job and pay structures
– Review and modernise job types and levels.
– Ensure job evaluation criteria reflect gender neutrality and are applied consistently.
– Ensure appropriate pay bands are assigned to every function.
2. Conduct pay-equality analysis
– Analyse pay differences between comparable positions and job categories.
– Identify unjustified gender pay gaps.
– Prioritise areas where the gap exceeds 5%, as this could trigger a future joint assessment.
3. Review recruitment, promotion and performance valuation processes
– Eliminate requests for applicants’ previous salary information.
– Document and communicate pay-setting and promotion criteria.
– Ensure performance appraisals are structured and consistently applied.
– Remove pay-related confidentiality clauses from employment contracts.
4. Prioritise internal communication and training
– Prepare managers to answer pay-related questions.
– Train HR teams on new rights and reporting obligations.
– Develop communication materials to promote clarity and employee trust.
SANCTIONS
Member States must provide for effective, proportionate and dissuasive sanctions for infringements of national provisions related to the right to equal pay. These sanctions may include fines, which can be calculated on the basis of the employer’s gross annual turnover or total payroll.
Member States must set out specific sanctions for repeated breaches of any law or obligation concerning equal pay for men and women for the same or work of equal value, to reflect the severity of the infringement and to further deter such infringements. Such penalties could include different types of financial disincentives such as the revocation of public benefits or the exclusion, for a certain period of time, from any further award of financial inducements or from any public tender procedure.
Member States must ensure that any worker who has suffered damage due to a breach of any right or obligation related to equal pay is entitled, by national rules, to full compensation or remedy for the damage suffered.
Győr, March 19th, 2026
Havasi Ügyvédi Iroda
dr. Havasi Bence
managing partner
[1] https://trusaic.com/resources/resources-eu-pay-transparency-directive-member-state-transposition-monitor/
