What to know about Pay Transparency

5 +1 important information about EU 2023/970 Directive

The EU Pay Transparency Directive is a new, binding EUwide regulation designed

to make pay systems more transparent and to reduce the gender pay gap across the

European Union. Its core purpose is to enforce the principle of equal pay for equal

work and to eliminate pay discrimination.

What will this article cover?

1. What is the pay transparency obligation?

2. Why was its introduction necessary?

3. What are the employees’ “new” rights under the Directive?

4. Who does it apply to, and by what deadline?

5. What is the relevant Hungarian legislation?

6. What questions does the new regulation raise?

What is the pay transparency obligation?

The EU Pay Transparency Directive introduces mandatory requirements that:

• make wages more transparent,

• oblige employers to share payrelated information,

• and address the gender pay gap.

Member States must transpose the rules into national law by 7 June 2026.

Why was its introduction necessary?

The EU gender pay gap remains around 12–13%, and the gender pension gap is

approximately 26%.

The directive aims to:

•  reduce these disparities,

•  empower workers to assert their rights,

•  create fairer and more transparent pay structures across the EU.

  
  

What are the employees’ “new” rights under the

Directive?

Employees gain the right to request:

•  information about their own pay level,

•  the average pay levels of workers performing the same or work of equal value, broken down by gender,

•  the criteria for pay setting and career progression, which must be objective and genderneutral.

Who does it apply to, and by what deadline?

From 2026, the following obligations will apply to all employers:

• indicating pay ranges in job advertisements,

• a ban on asking applicants about their previous salary,

• objective, genderneutral pay and career progression criteria,

• employees’ right to access pay information.

This means the rules apply equally to a company with 5 employees and one with

5,000.

However, regular pay gap reporting will only be mandatory for larger employers: from

2027 for companies with more than 150 employees, and from 2031 for those with

100–149 employees.

For employers with fewer than 100 employees, the Directive gives Member States full

discretion. It therefore remains an open question whether Hungary will introduce a

reporting obligation for companies employing fewer than 100 people.

What is the Hungarian legislation?

Under the Directive, Member States must transpose the rules into national law by 7

June 2026. At present, no Hungarian law or legislative amendment has yet been

adopted.

What questions does the new legislation raise?

The Directive highlights already in its title that its aim is “equal pay for equal work or

work of equal value for men and women.” However, it raises the question of why the

legislation focuses exclusively on gender-based differences. Other objectives could

be equally worthy of support, such as monitoring pay disparities between employees

in the capital and in rural areas, or even differences based purely on age.

There is no doubt that the rules aim to create a more balanced and equitable labour

market, but it is also worth asking whether excessive transparency around pay might

generate tension among employees, or between employees and employers. In our

experience, employees in the Hungarian labour market typically keep their salaries

confidential among themselves, even without any explicit instruction to do so. From

an HR perspective, a key challenge will be managing the transition period while

employers adjust any existing pay disparities. In practice, only the year 2026 will be

available for this.

Another question is how employee motivation can be maintained if a candidate

receives an offer at the lower end of the advertised pay range. It will be obvious to

them that the company has assessed their professional qualities as below average,

and regardless of whether this is objectively true, the employee is likely to feel hurt.

This will pose a challenge for managers responsible for maintaining morale and

motivation.

It is clear that the HR profession is entering an exciting period filled with new

challenges and tasks. To prepare and implement the necessary changes effectively, it

is advisable to seek support from an HR consultant, helping your business minimise

both legal and HR-related risks.

Tax&Bell Hungary is a professional HR and tax advisory firm you can rely

on—whether you wish to outsource your HR processes or need consulting or

an audit.

Take advantage of our free 30minute HR Consulting Session, during which we

assess your and your company’s real needs and provide immediately useful

guidance.

Feel free to contact us: info@taxandbell.hu