Equal pay and EU directive on pay transparency

publishedAt: 2025-07-17T08:00:00.000Z

slug: “equal-pay-and-eu-directive-on-pay-transparency” In today’s world, where values such as fairness, equality and transparency are gaining importance not only socially, but also as key elements in building strong and competitive organizations, the issue of equal pay is becoming one of the most important challenges and priorities for modern companies. Ensuring that employees receive equal pay for work of equal value, regardless of gender or other arbitrary criteria, is not only an ethical and legal requirement, but also a strategic investment in human capital, the company’s reputation and its long-term success. In the context of upcoming legislative changes, including the implementation of Directive (EU) 2023/970 of the European Parliament and of the Council on strengthening the application of the principle of equal pay for men and women for equal work or work of equal value through pay transparency and enforcement mechanisms, Polish employers face the need to thoroughly review and adjust their pay policies. The purpose of this article is to comprehensively discuss the issue of pay equity - from understanding its fundamental importance, to analyzing the causes of existing inequalities, to the practical steps that organizations can and should take to build fair pay systems. Special attention will be paid to the implications of the new EU directive, which introduces revolutionary changes to pay transparency and enforcement mechanisms. EITT, as an expert in human resources management and labor law compliance, wants to provide you with the knowledge and tools you need to not only meet the new requirements, but, more importantly, to turn the quest for pay equity into a real competitive advantage and the foundation of a strong, trust-based organizational culture. Shortcuts

Pay equity as the foundation of a fair and effective organization: definition, ethical dimension and strategic importance in business

Equal pay, in its broadest sense, means the principle that employees performing the same work or work of comparable value (comparable worth) should receive equal pay, without discrimination based on gender or other protected characteristics. It is a concept that goes beyond the narrow understanding of “equal pay for equal work” to include situations in which different jobs, requiring similar levels of skill, effort, responsibility and performed under similar conditions, should be similarly compensated. Underlying this principle is the fundamental human right to fair treatment and non-discrimination, which is not only a moral imperative, but also a key element in building a society based on equal opportunity. In the business context, the pursuit of pay equity is of profound strategic importance. Organizations that actively promote and implement fair pay systems gain on many levels. First, they strengthen their employer brand (employer branding), becoming more attractive to current and potential employees, especially younger generations, for whom issues of ethics and social justice are of utmost importance. Second, fair compensation directly affects employee engagement, motivation and loyalty. The feeling of being treated fairly translates into higher job satisfaction, lower turnover and higher productivity. Third, equal pay contributes to building more diverse and inclusive teams, which in turn stimulates innovation and creativity. When employees know that their contributions are evaluated and rewarded objectively, they are more willing to share ideas and engage in company development. Finally, proactive pay equity efforts minimize the risk of litigation, financial penalties and reputational damage associated with potential accusations of pay discrimination. In today’s world, where transparency and corporate social responsibility are under increasing scrutiny, investing in pay equity becomes an indispensable part of sustainable growth and building long-term corporate value.

Understanding the wage gap and its multidimensional causes: from gender stereotypes to systemic organizational barriers

To effectively pursue wage equality, it is essential to understand the gender pay gap phenomenon and the multidimensional factors that contribute to it. The wage gap is the difference in average gross hourly earnings between men and women. There is an unadjusted wage gap, which represents the overall wage gap, and an adjusted wage gap, which takes into account factors such as education, seniority, industry, position or working hours in an attempt to isolate the element of potential discrimination. Despite progress, the wage gap is still a significant problem in most countries, including Poland and the European Union. The reasons for the wage gap are complex and often deeply rooted in social, cultural and organizational structures. One key factor is gender stereotypes and unconscious biases, which can influence decisions about educational paths, career choices, recruitment, promotions and wage setting. These often lead to occupational segregation, both horizontal (concentration of women in lower-paid occupations and sectors, e.g., care, education) and vertical (lower representation of women in leadership and management positions, the so-called “glass ceiling”). Work in female-dominated sectors is often systemically undervalued financially compared to work of similar value in male-dominated sectors. Career interruptions related to maternity and caregiving responsibilities, which continue to place a greater burden on women, also have a significant impact on their career paths and pay levels. Difficulties in reconciling work and private life, lack of flexible forms of employment or inadequate access to affordable childcare can force women to take part-time jobs or give up more demanding but better-paid positions. Lack of transparency in pay systems further hinders the identification and elimination of unjustified wage disparities. Finally, differences in negotiation skills or willingness to take risks, sometimes also culturally determined, can contribute to disparities. Understanding these multifaceted causes is essential for designing effective strategies to promote true pay equality in organizations.

EU directive on wage transparency: key changes and new obligations for Polish employers on the road to wage equality

A landmark step in the drive to eliminate the wage gap in the European Union is the adoption of Directive (EU) 2023/970 of the European Parliament and of the Council of May 10, 2023 on strengthening the application of the principle of equal pay for men and women for equal work or work of equal value through pay transparency and enforcement mechanisms. Member states, including Poland, have until June 7, 2026 to transpose this directive into national law. It introduces a number of fundamental changes and new obligations for employers that will have a huge impact on compensation management practices and companies’ overall HR policies.

Key provisions of the directive include:

• Right to pre-employment salary information: Employers will be required to inform job applicants about the starting salary level or its ranges (known as salary ranges) for a given position, such as in a job advertisement or before an interview. They will also be prohibited from asking candidates about their salary history.
• Workers’ right to information on wage levels: Workers will be given the right to request information from their employer on average wage levels, broken down by gender, for categories of workers doing the same work or work of equal value. This information is to be provided within a reasonable time and in an accessible form.
• Gender wage gap reporting obligation: Employers of a certain size (initially above 250 employees, later the threshold will be lowered to 150 and then 100 employees) will be required to regularly publish information on the wage gap between their female and male employees. The detailed scope and frequency of reporting will be determined by national law.
• Joint Pay Assessment: If reporting reveals a wage gap of more than 5% in a given category of employees, and the employer fails to justify the difference with objective and gender-neutral criteria, the employer will be required to conduct a joint pay assessment in cooperation with employee representatives. The purpose of this assessment is to identify and remove unjustified differences.
• Strengthening enforcement and compensation mechanisms: The directive provides for effective, proportionate and dissuasive sanctions for employers who violate the principle of equal pay. Employees who have experienced wage discrimination will be entitled to full compensation. It also provides for a shift in the burden of proof in wage discrimination cases - the employer will have to prove that there has been no violation of the equal pay principle.
• Access to information necessary to evaluate work of equal value: Employers will need to ensure that employees and their representatives have access to clear and understandable criteria used to determine salary levels and wage progression, which must be objective and gender-neutral. For Polish employers, this means they need to fundamentally review their compensation systems, job valuations, pay policies and communication practices now, in order to be ready to implement the new regulations by June 2026. This is a challenge, but also a huge opportunity to build fairer and more transparent workplaces.

Job valuation and wage audits: key tools in identifying and eliminating wage inequality

In the context of the drive for pay equality and preparations for the implementation of the requirements of the EU Remuneration Transparency Directive, two HR tools are gaining particular importance: objective job evaluation and systematic pay audits. These are fundamental instruments that allow organizations to reliably assess the internal consistency of pay systems and identify potential areas of discrimination. Job valuation, which we wrote about in detail in a previous article, is a key process for determining which roles in an organization are of “comparable value.” For a valuation system to support pay equity, it must be based on objective, non-discriminatory and gender-neutral criteria, such as required skills, responsibilities, effort (physical and mental) and working conditions. Criteria that might unconsciously favor characteristics traditionally attributed to a particular gender should be avoided. A well-executed valuation process provides a solid foundation for building a fair job hierarchy and a transparent pay structure, where compensation is linked to the actual value of the work to the organization, not to the gender of the employee. A pay equity audit, on the other hand, is a systematic analysis of pay data in an organization to identify any differences in pay between men and women (or other groups of employees) doing the same work or work of comparable value, and to investigate the reasons for these differences. The audit process usually involves several steps:

• Collect comprehensive data on salaries (base pay, bonuses, allowances) and employee characteristics (gender, seniority, education, experience, performance appraisal results) and the positions they hold (valuation score, department, level in the hierarchy).
• Grouping of employees performing the same or comparable work on the basis of job evaluation results or other objective criteria.
• Statistical analysis of wage differences within defined groups, with (or without) adjustment factors.
• An in-depth examination of the reasons for identified differences - whether they are justified by objective factors (e.g., differences in experience, efficiency, responsibilities), or whether they may indicate potential discrimination.
• Develop a corrective action plan when unjustified inequalities are found, such as through salary adjustments, reviewing pay policies or training for managers. Conducting payroll audits on a regular basis, even before it becomes a formal obligation under new regulations, is a sign of responsible management and allows organizations to proactively identify and eliminate inequities, building employee confidence and minimizing legal risks.

Building transparent and fair remuneration systems: from pay policies to communication with employees

Achieving true pay equality requires not only diagnostic tools such as job valuations or pay audits, but above all the conscious building and consistent application of transparent and fair pay systems. This means developing a clear pay policy that is understandable to all employees and based on objective principles. The remuneration policy should clearly define what factors affect the remuneration of individual positions (e.g., valuation results, market data, competencies possessed, individual achievements) and what are the rules for awarding raises, bonuses and other remuneration components. It is important that these criteria be gender-neutral and applied consistently to all employees. A key element of an equitable system is the creation of a transparent salary structure, often based on categories or pay grades (gradations) derived from job valuations. For each grade, there should be defined salary ranges (salary forks) that take into account both the intrinsic value of the position and its positioning relative to the market. Publishing these ranges, at least to some extent (e.g., in internal regulations or during recruitment processes, which will be a requirement of the new EU directive), significantly increases transparency and a sense of fairness. Organizations should also review their recruitment, promotion and employee evaluation processes for potential unconscious biases that could lead to pay discrimination. For example, avoid asking candidates about their previous salaries, as this can perpetuate existing inequalities. Decisions on promotions and raises should be based on clearly defined, objective criteria, not on managers’ subjective feelings. Communication with employees about how the compensation system works is also extremely important. Employees should understand how their salaries are determined, what opportunities exist for salary increases, and what actions they can take to advance their careers and increase their earnings. Open dialogue about compensation, conducted in a respectful and fact-based manner, builds trust and reduces the risk of speculation or feelings of injustice. In the context of the upcoming EU directive, preparing a communication strategy on salary transparency becomes one of the key tasks for HR departments and boards of directors.

The role of managers and HR in promoting pay equity: from eliminating unconscious biases to everyday management practices

Achieving and maintaining pay equity in an organization is a shared responsibility that requires the active involvement of both the HR department and line managers at all levels of management. The HR department acts as the strategic architect and guardian of the systems, while managers are the key implementers of these principles in daily practice. The HR department is responsible for designing and implementing fair and transparent job evaluation systems, pay structures and compensation policies, in compliance with applicable laws (including the upcoming EU directive) and best market practices. HR is also tasked with conducting regular pay audits, monitoring wage gap indicators, and preparing required reports. The role of HR in educating and training managers and employees on the principles of equal pay, pay transparency, avoiding unconscious bias, and conducting fair recruitment, evaluation and promotion processes is extremely important. The HR department should also create clear procedures for reporting possible cases of wage discrimination and ensure that they are handled fairly. Line managers, on the other hand, play a key role in the day-to-day application of pay equity and building a culture of fairness within their teams. They are the ones who make or recommend decisions about hiring new employees, setting their starting salaries (within the prevailing ranges), evaluating performance, awarding bonuses, promoting or referring them for training. Their awareness of potential unconscious biases and ability to make objective, fact-based decisions is absolutely fundamental. Managers need to be trained to discuss salaries, argue their decisions, and identify and address potential inequities in their teams. They must also lead by example, promoting equal treatment and open communication about expectations and development opportunities for all team members, regardless of gender or other characteristics. Their day-to-day actions and attitudes have a huge impact on employees’ perceptions of pay equity and the overall workplace atmosphere. Collaboration between HR and managers, based on a shared understanding and commitment to promoting pay equity, is a prerequisite for the success of these initiatives.

Benefits of pay equity beyond legal compliance: impact on engagement, innovation and employer brand

Pursuing pay equity and implementing transparent compensation systems is much more than meeting legal requirements or avoiding sanctions. Organizations that are genuinely committed to building a fair work environment reap a number of strategic benefits that translate into their long-term success and competitive advantage. One of the most immediate benefits is a significant increase in employee engagement and motivation. The feeling of being treated fairly, valued for one’s contribution and competence, rather than through the prism of gender or other arbitrary factors, builds a strong emotional bond with the company and prompts greater effort. Fair compensation is one of the cornerstones of trust between employee and employer. Organizations that promote equal pay are also becoming much more attractive in the labor market, making it easier for them to attract and retain top talent. In the era of the “employee market” and growing public awareness, candidates are increasingly choosing employers with a reputation for ethical, responsible and equal treatment. A strong employer brand, based on authentic values, is a powerful magnet for qualified professionals. What’s more, equal pay and the associated culture of inclusivity foster the building of more diverse teams. And research unequivocally shows that diverse teams are more innovative, creative and better at solving complex problems, which directly translates into business results. Diversity of perspectives and experiences leads to better decision-making and more effective adaptation to changing market conditions. Transparent and fair pay systems also help improve the atmosphere at work and reduce unhealthy rivalry or feelings of injustice. When employees understand the rules for setting salaries and see that they are applied consistently, the risk of conflict and speculation decreases. Better cooperation, greater trust and a stronger sense of community are other positive effects. Finally, companies that actively work for pay equality build their reputation as responsible corporate citizens, which gains recognition not only among employees and candidates, but also among customers, investors and the general public. An investment in pay equality is therefore an investment in human capital, social capital and long-term goodwill.

The future of pay equality and EITT’s strategic support: how to build a culture of fairness and transparency in remuneratio

The issue of pay equity and pay transparency will undoubtedly be one of the key topics in the field of human resources management in the coming years, driven both by legislative changes such as the EU Directive and by growing public awareness and employee expectations. Organizations that want to not only meet the new requirements, but also seize the moment as an opportunity to build a fairer and more effective work environment, must take strategic and comprehensive action. The future in this area is likely to be shaped by several important trends. We are seeing the growing importance of data analytics (people analytics) and HR technology (HR Tech) in monitoring and managing pay equity. Advanced tools allow for more precise pay audits, identifying potential anomalies and modeling the impact of different pay scenarios. Automation of some processes can also help reduce unconscious bias. There will be an increasing emphasis on proactive management of the wage gap, rather than just reactive action once it is identified. This means building pay equity principles into all HR processes - from recruitment to development to promotions and compensation. Transparency will become the new standard, and companies will have to learn to effectively communicate their pay policies and justify any pay gaps based on objective criteria. Building an organizational culture based on trust, openness and dialogue about compensation will also be key. Employees need to feel that they can safely raise these issues and that their concerns will be taken seriously. The role of managers as ambassadors of pay equity and those responsible for eliminating bias within their teams will be invaluable. Finally, it will be necessary to constantly monitor the legal environment and adapt internal regulations to changing regulations and market standards. EITT, as an experienced partner in strategic human resources management and labor law compliance, stands ready to support your organization at every stage of building a culture of fairness and transparency in compensation. We assist our clients in interpreting and implementing the requirements of the EU Remuneration Transparency Directive, bringing their systems and processes in line with the new regulations. We support in conducting professional pay audits and in designing and implementing objective job evaluation systems. We offer trainings and workshops for managers and HR professionals on eliminating unconscious bias, conducting salary discussions and building transparent pay policies. We also help develop communication strategies on pay issues and integrate pay equity principles into a company’s overall business strategy and organizational culture. Our goal is not only to help ensure legal compliance, but more importantly to support you in building a workplace where every employee feels valued, treated fairly and motivated to give their best. In conclusion, equal pay is not just a slogan or a legal requirement, but a fundamental principle for building a modern, ethical and effective organization. Implementing transparent and fair pay systems, based on objective valuation of work and free from discrimination, is an investment that brings long-term benefits in the form of greater employee engagement, a stronger employer brand and improved business performance. Upcoming legislative changes, including the EU Pay Transparency Directive, provide an excellent opportunity to conduct a thorough review of existing practices and accelerate efforts to achieve full pay equality. If your organization is facing the challenge of complying with new regulations, wants to build fairer compensation systems, or simply wants to strengthen its organizational culture based on the principles of equality and transparency, we warmly invite you to contact EITT. Our experts are passionate and committed to helping you through the process, providing solutions tailored to your unique needs and supporting you in building the organization of the future. Together, we can make pay equity a reality at your company.

Read Also

• GDPR and Employee Pay Data – How to Reconcile Transparency with Privacy?
• Directive 2023/970 – A Guide to New Pay Equality Regulations
• Penalties for Lack of Pay Transparency – What Sanctions Do Companies Face?

Read also

• Pay Transparency in the EU – A New Era of Salary Openness
• Directive 2023/970 – A Guide to New Pay Equality Regulations
• GDPR and Employee Pay Data – How to Reconcile Transparency with Privacy?

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Frequently Asked Questions

When must EU member states implement the pay transparency directive?

EU member states, including Poland, have until June 7, 2026 to transpose Directive (EU) 2023/970 into national law. This directive introduces requirements for salary range disclosure in job postings, employee access to pay level information, and mandatory gender pay gap reporting for larger employers.

What happens if a company’s gender pay gap exceeds 5%?

If reporting reveals a wage gap of more than 5% in a given employee category and the employer cannot justify it with objective, gender-neutral criteria, the employer must conduct a joint pay assessment with employee representatives. The purpose is to identify and eliminate unjustified pay differences.

What is a pay equity audit and why is it important?

A pay equity audit is a systematic analysis of compensation data to identify unjustified pay differences between men and women performing the same or comparable work. It involves collecting salary data, grouping employees by comparable roles, running statistical analysis, and developing corrective action plans when inequities are found.

How does pay transparency benefit organizations beyond legal compliance?

Transparent pay systems increase employee engagement and motivation, strengthen employer branding to attract top talent, foster more diverse and inclusive teams that drive innovation, and reduce workplace conflicts by building trust. Companies that proactively pursue pay equity also minimize the risk of costly discrimination lawsuits.