The EU Pay Transparency Directive (ETRL) is moving closer to operational practice. It is now important for HR managers to proactively examine compensation structures, recruiting processes and reporting obligations. It is also important to keep an eye on the company pension scheme (bAV).
Those who are responsible for compensation systems today control much more than salary ranges and budgets. It’s about fairness, traceability, compliance and, increasingly, the question of how remuneration structures can be reliably presented in audits, reports and information procedures. This is exactly where the EU Pay Transparency Directive comes in, which should actually have been implemented into national law by June 7, 2026. Goal: To enforce equal pay between women and men more effectively and to increase transparency.
For employers, the directive is moving up the priority list, as many of the future requirements have a deep impact on existing HR processes: be it job advertisements, salary adjustments, internal information procedures or the documentation of pay structures. Those who organize issues like these at an early stage gain freedom of action and at the same time create a solid basis for later legal requirements.
Familiar guiding principles, but with a sharper effect
The aim is that equal work or work of equal value should be paid equally. The German Pay Transparency Act already follows this model. However, the ETRL goes one step further. It strengthens the information rights of applicants and employees, introduces binding reporting requirements for many employers across Europe and tightens legal enforcement.
For HR, this means: Pay transparency is moving from a selective equality issue to an integral part of modern compensation and governance structures. Human resources departments, compensation and benefits teams and legal departments move even closer together.
Recruiting under the EU Pay Transparency Directive: What is changing
The guideline starts particularly early in the recruitment process. Before concluding an employment contract, applicants should receive information about the planned starting salary or its range. Relevant collective bargaining regulations must also be included, ideally in the job advertisement. At the same time, companies will not be allowed to ask applicants about their previous remuneration in the future.
In practice, this is more than just a formality. Job advertisements, guidelines for interviews and approval processes for new positions will need to be more closely interlinked in the future. Anyone who has previously thought of salary ranges internally should now structure them in such a way that they are consistent, comprehensible and can be communicated to the outside without discrimination. This strengthens legal certainty and at the same time has a positive effect on applicants and the employer brand.
Employees’ rights to information: More transparency in the employment relationship
But the directive also extends transparency for existing employment relationships. Employees are entitled to information about their own pay levels as well as the average pay of groups of employees who do the same work or work of equal value, broken down by gender. At the same time, the protection of individual salary data is maintained: it is about average values and categories, not about the disclosure of individual salaries of named colleagues.
In practice, this means that companies should check whether their job architecture, function assessment and documentation of compensation decisions are sustainable in order to provide such information in a reliable manner. Agreements that are intended to fundamentally prevent discussions about compensation do not fit this new logic.
Reporting and gender pay gap: what obligations companies face
The directive provides a particularly strong lever for the gender pay gap. Companies with at least 100 employees are gradually included in binding reporting. Companies with more than 250 employees report annually from June 7, 2027; for those with 150 to 249 employees, a three-year cycle applies from this date. Employers with 100 to 149 employees will also start every three years from June 7, 2031. According to the ETRL, there is no reporting requirement for smaller companies – but a German implementation law could in principle provide for this.
The content of said reports goes far-reaching. On the one hand, it includes the classic gender pay gap as a whole as well as differences in supplementary or variable remuneration components. The information should be accessible to employees, employee representatives and responsible authorities; some of the data must also be published. As soon as there is a pay gap of at least five percent in a group of employees that cannot be supported by objective, gender-neutral criteria and is not eliminated within six months, the directive requires a joint pay assessment with the works council and the like.
This is the moment for HR managers to read compensation data strategically. It’s not just about a reporting date, but about the ability to make compensation logic plausible: for basic salaries, allowances, bonuses, non-monetary benefits and long-term benefits.
Document and evaluate remuneration structures in a legally secure manner
However, the directive does not stop at transparency. It also strengthens the enforcement of claims. Employees who can make discrimination plausible benefit from easier evidence; It is then up to the employer to demonstrate compliance with the principle of equal pay. There are also claims for damages and effective sanctions. EU member states must design limitation periods in such a way that claims for equal pay can be effectively enforced.
This means that contracts, internal policies and HR processes are becoming increasingly important. In this context, good preparation means above all: defining clear criteria for compensation and development, ensuring clean documentation and implementing reliable decision-making processes. According to experts, it is often helpful to involve all stakeholders right from the start.
BAV and EU Pay Transparency Directive: What is still open
Company pension schemes also fall within the scope of the ETRL. However, it currently remains unclear how the legislature will specifically shape this in this country. Particularly relevant is the question of which forms of financing should be included in reporting obligations and whether the company pension scheme should be based more on contributions or on later benefits.
From a practical perspective, there is a lot to be said for a contribution-related approach because benefits depend on a number of factors that go beyond the immediate salary decision. The handling of vested rights and deadline-related pension regulations also needs to be discussed. Particularly in established supply systems, differences often arise due to historical regulations, transitional models or superseding supply regulations.
It is therefore advisable for those responsible for HR and company pension schemes to take a closer look at existing pension schemes, financing logic and documentation. Where objective, gender-neutral criteria can be reliably derived and explained, security in subsequent reporting increases significantly.
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Checklist: HR should now have these five topics on the agenda
- Check recruiting processes
Job advertisements, interview guides and approvals for new positions should be drafted in such a way that compensation ranges and collective agreements can be communicated clearly and consistently. - Make compensation structures transparent
HR must ensure that pay decisions are based on objective, gender-neutral criteria and can be clearly documented internally. - Prepare information processes
Companies need reliable processes in order to be able to process future requests for information in a structured, timely and data protection-compliant manner. - Think about reporting obligations in a timely manner
Depending on the size of the company, it is worth taking a look now at what data is available for later reports on the gender pay gap and how reliably it can be evaluated. - Include company pension schemes and benefits
Company pension schemes and other compensation components should also be examined at an early stage to see how they should be assessed in the future transparency and reporting context.
Company pension schemes in reporting: What companies should pay attention to
The national implementation law fills the to-do list for HR. The agenda:
- Inventory of compensation systems,
- Review of job and evaluation systems,
- standardized rules for recruiting and salary determination as well
- Benefits and company pension components.
Coordination between the human resources department, those responsible for compensation, the legal department, payroll and works councils is just as important. The practical challenge of the Pay Transparency Directive does not just lie in new obligations. Above all, it lies in structuring pay decisions in a comprehensible, gender-neutral and consistent manner. This is exactly where there is an opportunity: those who professionally organize transparency not only strengthen trust, but also improve the controllability of compensation systems and thus position HR as a strategic designer.
Conclusion
The Pay Transparency Directive brings familiar principles into a new, much more binding format. For employers and HR, recruiting, information procedures, reporting and legal enforcement are brought closer together. The company pension scheme also belongs to this examination, even if detailed legal questions are still unclear. In this respect, now is the right time to put remuneration and benefit systems to the test in a structured manner. Anyone who tackles this creates an overview, strengthens the quality of their own processes and approaches implementation with significantly more security.
