Pay Transparency - Public Procurement, Tendering, Concessions
- taxandbell
- 2 days ago
- 3 min read
Starting in 2026, the EU Directive 2023/970 on Pay Transparency will bring significant changes to Hungarian employers. The obligations defined by the Directive will be effective from 2026, and reporting requirements will begin in 2027.
Key Principles from the Directive
The preamble of the Directive outlines the principles behind the measures and obligations related to pay transparency across 66 paragraphs. These references trace back to the Treaty on the Functioning of the European Union (TFEU), which mandates that all Member States ensure equal pay for men and women for equal work or work of equal value.
The most important principles include:
The Charter of Fundamental Rights of the European Union prohibits all forms of discrimination, including gender-based.
Article 10 of the TFEU requires combating discrimination based on gender, race or ethnic origin, religion or belief, disability, age, or sexual orientation.
Directive 2006/54/EC mandates the elimination of direct and indirect gender-based discrimination in all aspects and conditions of pay for the same or equivalent work.
Measures must be taken to prevent the adverse effects of the COVID-19 pandemic from deepening gender inequality.
Gender pay gaps must be based solely on objective criteria.
The actual facts of employment must take precedence over the formal designation of the employment relationship (substance over form).
These principles represent the core pillars of the Directive, according to the author. However, paragraph (57) introduces an additional key principle: “In order to comply with those obligations on employers as far as the right to equal pay is concerned, Member States should in particular ensure that economic operators, in the performance of a public contract or concession, have pay setting mechanisms that do not lead to a gender pay gap between workers in any category of workers performing equal work or work of equal value that cannot be justified on the basis of gender-neutral criteria.”
Implications for Public Procurement and Tenders
Companies receiving budgetary support or participating in tenders are familiar with exclusion criterias related to lawful operation. Common requirements include reliable taxpayer status, no public debt, no final penalties related to social security or labor law in recent years, and no violations listed in the public employment authority register.
A new condition may be added: compliance with the obligations set out in the Pay Transparency Directive (EU 2023/970) and relevant Hungarian legislation. This principle appears again in Article 24 of the Directive, which requires Member States to ensure that economic operators fulfill equal pay obligations during public procurement or concession performance.
The Directive allows Member States to decide whether contracting authorities must exclude any participant from procurement if they fail to meet the Directive’s obligations (e.g., transparency, 5% pay gap threshold).
Preparing for Compliance
Although no Hungarian law has yet been enacted, the obligations in the Directive will apply from 2026. It is advisable to prepare in advance, as the first reporting deadline is in 2027, based on 2026 data. Employers who do not review and adjust their pay structures in early 2026 may have to report unfavourable figures.
We offer HR and tax advisory services. Reviewing pay structures with an experienced HR consultant is recommended.
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