The most recent HR Update Report from business representative group Ibec revealed that just 1 per cent of Irish organisations are fully prepared for the upcoming European Union Pay Transparency Directive, due to take effect in June 2026. The report, which was based on a survey of 391 HR professionals, found that just over a quarter of quarter (27 per cent) were engaged in preparations for the directive while 22 per cent have yet to begin.
These findings should be a cause for some concern in light of the scale of the preparations required, according to Ibec head of employment law services Nichola Harkin. “There is a lot of work to do, and it shouldn’t be underestimated,” she says. “Organisations need to allocate time and potentially budget for additional resources to devote to it.”
The directive places obligations on employers to be transparent with workers and candidates about pay and pay progression. It also introduces a ban on pay secrecy clauses and prevents employers from asking job candidates about their pay in previous roles. The directive came into force in June 2023, and Ireland has until June 7th, 2026, to implement it.
Despite Ireland’s tardiness in its implementation, it appears that the Government is determined to go significantly beyond its minimum requirements. That is certainly the case for pay transparency during the recruitment process. That element of the directive has already been through pre-legislative scrutiny in the Oireachtas.
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“The directive requires companies to disclose the salary for the role prior to interview,” Harkin notes. “But the scheme we have seen says it must be disclosed in the job advertisement.”
That is something Ibec has pushed back on. “The intention of the directive is not to compel companies to share commercially sensitive information,” Harkin explains. “It’s to share information with the candidate base. The directive says organisations are not restricted to paying the advertised salary, they can negotiate. But some candidates might be deterred by a salary which appears low. That can be to the disadvantage of smaller firms. We would like the legislation to say that the salary should be disclosed in the advertisement or prior to interview as it says in the directive. We are still in the early stages of the Bill, though, and there is still plenty of time for amendments.”
Under the new rules, employers will not be allowed to ask candidates about their current or previous pay levels. “That may be a challenge for organisations that follow public-sector pay scales,” Harkin notes. “They need to be able to plug candidates into the relevant point on their pay scale. The intention of the directive is to ensure that people are paid fairly and that must be taken into account in the legislation.”
The fair pay element of the directive will involve a huge amount of work for organisations. “There will be an obligation on employers to categorise work of equal value,” she explains. “Two roles that look quite different could be of equal value. It will be a huge task for organisations to evaluate and categorise all roles. We haven’t seen any guidance from Government on that yet. It’s a process that could take months and it is very difficult to complete it in the absence of guidelines. Guidance is needed as a matter of urgency.”
Employees will be entitled to seek information about average pay within their category broken down by gender. “They won’t be able to see individual pay as there will be a need to ensure privacy. Additional guidance on that is required.”
She advises employers to start preparations by educating their employees about the kind of information that will be more out in the open and what won’t be. “They need to consider doing that straight away.” They should also review contracts of employment to ensure they are compliant with the directive, especially in relation to the prohibition of pay secrecy clauses.
“The bulk of the preparatory work will be in assessing recruitment processes, reviewing contracts of employments and reviewing pay and progression policies,” she notes.
“There is guidance on the directive on the Ibec website,” she adds. “It provides a good overview of the directive and information various aspects of it. We are also running a series of one-day seminars around the country to help employers prepare for it.”
Lobbying activity is also continuing. “We are engaging with the department to try to ensure that our members’ concerns are taken into account. In the absence of guidance, it is very difficult for employers to fully prepare. We are trying to communicate that message to government. Also, there is a need for the Government to be aware of its commitments on competitiveness; there is no necessity to go beyond the terms of the directive.”
For more information visit ibec.ie.
