The EU Pay Transparency Directive: what a mid-market company actually has to do.

Most of what has been written about Directive (EU) 2023/970 is written for lawyers. This is written for the CEO or CFO of a company with 100 to 1,000 employees — in one country or across several — who has to be compliant, has no appetite for a two-year programme, and wants to know what actually has to exist by when.

The Directive was adopted in May 2023. The transposition deadline passed on 7 June 2026 with only four Member States having met it; most of the others are still drafting, with national laws now expected through late 2026 and into 2027. That does not buy time: the obligations are known, the national versions can only add to them, and the reporting dates have not moved. The headline obligations are not controversial. What catches companies out is the sequence: the reporting obligations attract all the attention, but they are the last thing you build, not the first. Everything before them is structural, and most mid-market companies have not built it.

The five obligations, in plain terms

1. Pay transparency before hiring. Candidates must be told the starting pay or pay range before the interview, and you may no longer ask about their pay history. This one is operational from day one of transposition and applies regardless of headcount.
2. The right to information. Any employee can ask for their own pay level and the average pay, split by gender, for colleagues doing the same work or work of equal value. The Directive sets a maximum of two months to answer; some national laws set a shorter deadline. You must also remind employees annually that this right exists.
3. Objective, gender-neutral pay criteria. You must be able to show that pay, pay progression and the criteria used to set them are objective and gender-neutral. In practice this means a job architecture: roles graded on criteria you can articulate and defend.
4. Gender pay-gap reporting. Companies with 250 or more employees report annually from 2027; 150 to 249 report every three years from 2027; 100 to 149 from 2031. The report covers the overall gap, the variable-pay gap, the median gap, and the gap per category of workers doing work of equal value.
5. Joint pay assessment. Where the gap in any category is 5% or more, cannot be justified by objective criteria, and is not remedied within six months, you must conduct a joint pay assessment with employee representatives. This is the enforcement teeth, and it is where an unprepared company ends up negotiating its pay structure with its Works Council under time pressure.

Why the sequence matters

Obligation four presupposes obligation three. You cannot report a pay gap "per category of workers doing work of equal value" unless you have first decided, defensibly, which work is of equal value. For a company that grew by acquisition, that operates in several countries, or that has never had a formal grading structure, that decision is the whole project. Running the numbers is a week's work once the architecture exists. Applying a grading method to a few hundred roles is a matter of weeks. What takes three to five months is the part no methodology solves: leadership owning the grade structure, managers accepting where their people sit, and employee representatives brought in before anything is reported. The architecture is a technical exercise; getting the organisation to stand behind it is the project.

This is also why the 5% threshold is less reassuring than it looks. A company with no grading structure typically discovers that it cannot explain its gaps, not because they are large, but because it never wrote down the criteria that would explain them. The joint pay assessment is triggered by the absence of an explanation, not by the size of the number.

The multi-country complication

If you employ people in more than one Member State, each country transposes the Directive on its own terms: the obligations above are the floor, but thresholds, deadlines, the reporting format and the role of employee representatives can all be stricter nationally, and the reporting entity is defined per country. The temptation is to run one compliance project per country. That doubles the cost and, worse, produces several incompatible job architectures that have to be reconciled later. The approach that holds is one grading methodology deployed group-wide, with a country layer on top for sector agreements and local reporting mechanics. I have deployed this at multinational scale, and the group-wide architecture is the part that cannot be retrofitted.

What a workable programme looks like

For a company of this size, the honest timeline is six to nine months and it has three phases. First, a job architecture: a grading methodology applied across the organisation, with each role placed, and the criteria documented. This is where national sector agreements and existing collective classifications have to be reconciled with your internal structure rather than ignored. Second, the pay-equity analysis itself, run on the architecture, with the gaps categorised into explained, explainable-once-documented, and unexplained. Third, the policy layer: the hiring-disclosure practice, the information-request process, the annual reminder, and the reporting template, all of which are straightforward once the first two phases exist.

The decisions that matter sit in phase one, and they are leadership decisions, not HR ones. How many grades. Whether to publish ranges internally. How to handle the three or four senior roles where the gap is real and the remedy is expensive. Those are the conversations I would want on the executive agenda this quarter, not in the spring of 2027 with the first reporting deadline eight weeks out.