Rukhsana Alam comments on EU Pay Transparency Directive

New EU rules coming into force this June will require companies to justify pay differences between workers doing the same or equivalent work – and remediate any gaps that cannot be explained on objective, gender-neutral grounds. There are implications for multinational businesses operating across the EU’s 27-member bloc.

The EU Pay Transparency Directive, which will be implemented across the EU by 7 June 2026, will apply to any EU-based business with more than 100 employees. It gives workers an explicit right to request information about their individual pay and average pay levels across comparable roles, broken down by gender.

Employers must respond within two months and inform staff of this right annually. Where a gender pay gap of 5 per cent or more is identified and cannot be objectively justified, businesses must carry out a joint pay assessment with workers’ representatives.

Speaking to Compliance Week, Rukhsana Alam, consultant solicitor at Spencer West, says whilst the Directive doesn’t apply directly to employers in the UK, it can cause a significant impact, especially for multinational organisations.

“Any UK companies with entities in the EU will need to comply with the Directive in those member states. They may also elect to adopt similar transparency for their UK entities, in order to harmonise practices across their organisation,” Rukhsana said.

“There will be a cultural change, both in terms of communication and transparency.

“It is realistic to expect a rise in complaints, given that workers can request detailed pay data and will analyse this and make comparisons with others. Whether companies will be overwhelmed will depend on the HR systems and processes that have been put in place before the legislation comes into force.

“It is also possible that the directive could see a rise in the use of whistleblower hotlines.”

Read the full article published by Compliance Week here.