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The EU Pay Transparency Directive (the Directive) came into force in June 2023 and Ireland has until 7 June 2026 to implement the new rules. It contains far-reaching new measures, such as gender pay-gap reporting across all EU member states, a ban on pay secrecy, as well as information rights for employees and job candidates.
The Directive has not yet been transposed in Ireland, but the initial steps in the transposition process are underway. In January 2025, the General Scheme of the Equality (Miscellaneous Provisions) Bill 2024 was published with two provisions aimed at enhancing transparency prior to employment and at transposing Article 5 of the Directive. However, as the General Scheme is currently being revised, it remains to be seen whether the draft as it currently stands will become a formal bill and eventually law. Further, the government’s legislative programme states that the Heads of a Pay Transparency Bill are in preparation.
In a recent ALG client webinar, we took the opportunity to explore what the Directive will mean for employers and discuss the challenges employers are experiencing in preparing for its implementation. Aisling Muldowney, Triona Sugrue and Kate Heneghan from ALG’s Employment team were delighted to be joined by Anne Phelan, Associate Director with Willis Towers Watson, who shared some key practical insights during a panel discussion.
Key elements of the directive
The Directive will require employers to implement significant measures designed to increase transparency in relation to employees’ pay. Kate Heneghan examined the key elements of the Directive during our webinar, which are briefly summarised below. Our previous briefings on this topic include further details on the Directive and can be found on ALG’s Gender Pay Gap Reporting and Pay Transparency hub.
Pay structures: Employers will need to put in place pay structures ensuring equal pay for equal work or work of equal value.
Gender pay gap reporting: While gender pay gap (GPG) reporting under the Directive is similar to the existing Irish regime, there will nonetheless be some important changes on that front such as an obligation to report on the pay gap by category of employee. Another significant change to the current GPG framework is that the concept of pay under the Directive for the purposes of GPG calculations will be wider and will include all consideration, whether in cash or in kind, which an employee receives in respect of their employment.
Joint pay assessments: Where the GPG report indicates a gap which (i) is at least 5% in any category of workers, (ii) has not been justified by objective and gender-neutral factors and (iii) has not been remedied within six months of the date of the gender pay gap report, the employer will have to carry out a pay assessment (i.e. an equal pay audit) in co-operation with employee representatives, with the results to be made available to employees, their representatives and the monitoring body.
Ban on pay secrecy: Measures will be put in place to prohibit pay secrecy clauses, permitting employees to disclose information about their pay. Triona Sugrue highlighted that “pay” is very broadly defined under the Directive, covering an employee’s basic salary and any other consideration in cash or in kind, including for example any sign-on or retention bonuses.
Information rights for employees: All employees will have a right to request information from their employer on (a) their individual pay level; and (b) on average pay levels, broken down by gender for employees doing the same work or work of equal value.
Pay transparency for job candidates: Employers will be required to indicate the initial pay level or range in a job vacancy notice prior to interview, or otherwise. Importantly, employers will not be permitted to ask applicants about their pay history (including their current salary).
Compensation and penalties for non-compliance: Under the Directive, employees will be entitled to full recovery of back pay and related bonuses and payments in kind, as well as compensation for lost opportunities and non-material damage with no fixed upper limit. This could be quite substantial, depending on how far back an equal pay issue goes. Member States must set down rules on effective, proportionate and dissuasive penalties for infringements of the right to equal pay. Member states are given significant latitude to determine the nature of these rules.
Impact of the directive: what can we expect?
It is clear the impact of the Directive will be significant. During our webinar, we delved into the real impact the Directive will have from two key perspectives: (i) the legal perspective, and (ii) the practical perspective of
compensation and rewards specialists. Anne Phelan provided practical and insightful advice to attendees based on her extensive practical experience in this field. We saw a real-time discussion unfold from these two perspectives with the following key take aways:
Anne Phelan was ultimately very positive about the outlook for employers in Ireland in this space. While this is a key topic of focus for many WTW clients at the moment, it is relatively similar to the consultation that takes place in the reward space already. In short, Anne says that the Directive is testing the fundamentals underpinning equal pay, i.e. that employers have policies and practices in place in relation to pay, job structures and evaluation of roles, which is all good practice. Key to Anne’s practice is a discovery conversation with clients to see where they are at present and to try and “meet them where they are”. While some employers may be starting with a clean slate, the key is to establish foundational building blocks in relation to job levelling. Other clients will of course be in a different space and will already have pay ranges and benefit statements in place which they may already share with their employees. These employers are looking to do pay audits now, given that there is only one more year-end cycle to correct any issues before the Directive goes live on 7 June 2026.
Anne Phelan is confident that it is never too late for employers who are at the start of their journey to get ahead of the Directive and encourages employers to look at four workstreams – as follows:
Next steps
Another important message emerging from the panel discussion, which was moderated by Aisling Muldowney, is that despite the fact many of the details are yet to be determined, there is a lot that employers can do to get ahead of the curve. Employers should take steps now to examine existing pay structures, recruitment, pay transparency and gender pay gap reporting practices, and address any issues, before they are forced to do so.
A recording of this webinar is available for ALG clients through our KnowledgePlus platform. Please contact your usual ALG Employment law contact for further information on how to access the recording.
Date published: 30 May 2025
