How to Prepare for Pay Transparency Laws: An Employer's Guide (2026)

What are the steps to prepare for pay transparency laws?

Whatever country you are in, preparation follows the same order. Money and structure come before communication, and analysis comes before publication. These ten steps are how we teach it at Bodhih, and they work for a 60-person firm and a 600-person group alike.

• 1. List every employing entity, its country and its headcount, and find the rules for each (ask your adviser how your law counts employees).
• 2. Score your readiness on a short set of practices, from 0 (nothing) to 4 (embedded and reviewed), and get a mandate from leadership.
• 3. Build one clean pay extract, reconcile it to payroll and complete a data protection impact assessment.
• 4. Put every job in a family and a level using gender-neutral job evaluation on skills, effort, responsibility and working conditions.
• 5. Build a salary band for every level and location.
• 6. Show the range in adverts or before the first interview, and remove pay-history questions from every form, script and agency brief.
• 7. Calculate the mean and median hourly gaps, variable pay gaps, quartiles and the gap in each category of workers.
• 8. For each category at or over your threshold, test the reasons, correct what is unexplained and plan a joint pay assessment if one is needed.
• 9. Set up a procedure for information requests, tell workers about their rights, and brief managers.
• 10. Write the report, sign it off, keep an evidence register and review the rules every quarter.

What does the EU Pay Transparency Directive require of employers?

Directive (EU) 2023/970 sets minimum rules that each member state writes into national law. The deadline for those laws was 7 June 2026. In November 2026 many member states were still adopting theirs, so the duties reach your organisation through your national law and its timetable. The European Commission summarises the core as information before hiring, a ban on pay-history questions and pay secrecy, a right to information, reporting by employers with at least 100 employees, joint pay assessments and stronger enforcement, including a shift of the burden of proof.

In March 2026 the Commission and the European Institute for Gender Equality launched EU-wide guidelines on gender-neutral job evaluation and classification, which are worth reading before you design your levels.

Which pay transparency rules apply outside the EU?

Outside the EU the rules are a patchwork, and they change. At November 2026, these were the main ones for employers in English-speaking markets. Check the official page before relying on any of them.

How do you calculate the gender pay gap?

The gender pay gap is the difference between men's and women's average hourly pay, expressed as a share of men's. Hourly pay is usually base pay plus allowances, divided by weekly hours times weeks times the person's full-time equivalent. The median gap uses the person in the middle instead of the average, so a few very high salaries move it less. Your national law sets the exact pay elements, period and exclusions, so write your method in one paragraph and keep it the same each year.

Here is a worked example from a fictional 262-person French software company. It counted 93 women and 165 men (four people with gender not recorded were excluded and noted). For context, Eurostat puts the EU's average unadjusted gender pay gap at 11.1% in 2024 (provisional).

• The quartiles explain most of the 15.7% headline: women are half of the lowest-paid quarter and under a fifth of the highest.
• Equal work is a separate question, answered by the category gaps: two of seven levels showed gaps at or over 5%.

What is the difference between an explained and an unexplained pay gap?

An explained gap is the part of a category's gap that comes from factors you can show are legitimate. An unexplained gap is what is left. A factor counts only if it passes four tests: it is objective (measurable, not asserted), it is applied the same way to everyone, it is documented in a rule that existed and was used, and it is not itself linked to sex.

In the example, Level 4's 6.2% gap was partly explained by a written on-call allowance and time in level: 2.4 points, leaving 3.8%, under the threshold. Level 6's 8.3% gap was explained only by time in level (1.6 points). 'Market premium at hire' failed because there was no documented shortage. The unexplained 6.7% was corrected with nine increases worth €39,500 a year, about 0.25% of the entity's pay, bringing the projected Level 6 gap to 2.3%.

'She did not negotiate' and 'she earned less in her last job' never count. The first is not objective, and the second is exactly what pay-history bans exist to stop.

How should job adverts and offers change?

Build one recruitment process that meets the strictest rule you face, rather than a different one in each country. That avoids treating candidates in one country worse than in another and is simpler to run.

• No band, no advert: evaluate and band the job first.
• Take the advert range from the band for the level and location, and make it the range you genuinely expect to pay.
• Show it in the advert, or before the first interview where that is allowed; some places require it in the posting itself.
• Remove pay-history questions from forms, scripts and agency briefs, including 'optional' fields.
• Offer inside the band; record a written, objective reason and the effect on the category gap for anything outside it.
• Check local extras such as benefits descriptions and disclosure of AI used in screening.

How do you answer a worker's request for pay information?

Give requests one door, such as a shared address, and log each one the day it arrives so the clock is visible. Prepare the figures for the requester's category, check that the group is large enough that no colleague's pay can be worked out, have a second person review the reply, and answer in writing in plain words: the averages, the requester's own pay, the pay elements included and the period. Under the Directive the outer limit is two months; your national law may be shorter.

If the figures show a gap, start a review. A request is useful information about where to look, not a complaint to manage.

What are the most common mistakes?

• Publishing a headline gap without explaining how much comes from who sits in which level.
• Treating 'market rates' or 'negotiation' as reasons that explain a gap.
• Advert ranges so wide they tell candidates nothing.
• Leaving an 'optional' current-salary field on the application form or the agency's form.
• Letting information requests land in individual inboxes, where the deadline is missed.
• Analysing pay data before a data protection impact assessment and access controls are in place.
• Fixing this year's gap with increases but not the offer process that created it.
• Relying on a summary (including this one) without checking the official source and an adviser.

What does it cost, and can you do it without a consultant?

The honest answer is that cost depends on your size, the state of your pay data and how far you go. A useful way to decide is to estimate programme hours and fees against a range for the cost of doing nothing: claims, penalties under national law, a rushed joint assessment, losing senior women, slower hiring. Show both as ranges and say every input is an estimate. In the fictional example, doing it well had the narrowest range of total cost, not the lowest best case.

Most of the work, from the data and job evaluation to the bands and the first analysis, can be organised in-house. Spend adviser time on the judgement calls: how your law counts employees, whether a reason justifies a gap, and the wording of policies and reports. The Pay Transparency Readiness Kit gives you the workbook, forms and templates for each step, and Jobulary's individual development plan can turn what your HR team learns into measured goals.