The Pay Transparency Law explained
The new European Pay Transparency Directive requires employers to be fully transparent about compensation, job evaluation and equal pay for equal work. The burden of proof shifts to the employer and non-compliance carries significant risks.
Last update: January 15, 2026 · Reading time: 8 minutes
What does the Pay Transparency Directive require?
The directive brings fundamental changes to how organisations must handle compensation.
- Transparent pay structures and job evaluation
- Equal pay for equal and equivalent work
- Objective, gender-neutral justification of compensation
- Reporting on pay differences
- Right to pay information for employees
What does this concretely mean for your organisation?
The legislation translates into concrete obligations in your daily practice.
Objective and gender-neutral classification
Job evaluation must be demonstrably objective and gender-neutral. If your system doesn't meet this standard, the burden of proof will fall on you as the employer.
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Recruitment information obligation
For every vacancy you must disclose the salary or salary range upfront. Asking about someone's current salary? That's no longer allowed.
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Reporting obligation
Organisations with 100+ employees must periodically report on pay differences between men and women. If there is a gap of 5% or more without objective justification, a mandatory pay evaluation follows.
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Pay transparency right
Every employee can request by email what they earn compared to colleagues in the same category. You have two months to respond. This applies to all employers, regardless of size.
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Each of these obligations carries its own legal and financial risks. We show you what they are and how to prevent them.
The risks are substantial
Non-compliance with the legislation carries significant legal and financial risks.
Reversal of burden of proof
As an employer, you must demonstrate that there is no discrimination. In case of doubt, the ruling is in favour of the employee.
Strict deadlines for pay disclosure
Failure to respond to information requests in time can lead to sanctions and strengthens the employee's position in disputes.
Mandatory Gender Pay Report & JPA
For pay differences >5% without objective justification, a Joint Pay Assessment must be conducted within 6 months.
Publication of fines
Fines for non-compliance can be made public, resulting in reputational damage.
Risk of claims in job evaluation
Positions with different content can legally be considered equivalent, which can lead to unexpected claims.
Note: Positions with different content can legally be equivalent. A marketing manager and an IT manager can be considered comparable under the legislation.
The legally required process
Compliance requires a structured process. These five steps are essential.
Load
(Directive recital 44; WGBMV article 1)
What the law requires
Collect all compensation data and job information.
What Payqual does
Payqual connects to your HR system or securely processes your export.
Cluster
(WGBMV article 8; WGBMV article 7; Directive recital 26)
What the law requires
Group positions based on equivalent work.
What Payqual does
Automatic clustering based on objective criteria.
Detect
(WGBMV article 10c paragraph 1, 5-6; Directive recital 39)
What the law requires
Identify pay differences >5% between genders.
What Payqual does
Real-time alerts for deviations that require attention.
Correct
(WGBMV article 10c paragraph 6; WGBMV article 10d; Directive recitals 43 and 51)
What the law requires
Justify or correct identified differences.
What Payqual does
Tools to record objective justifications.
Report
(WGBMV article 10b and 10c; Directive recitals 38–41)
What the law requires
Submit the required reports to the regulator.
What Payqual does
Ready-made reports that meet all PTD requirements.
Load
What the law requires
Collect all compensation data and job information.
What Payqual does
Payqual connects to your HR system or securely processes your export.
Cluster
What the law requires
Group positions based on equivalent work.
What Payqual does
Automatic clustering based on objective criteria.
Detect
What the law requires
Identify pay differences >5% between genders.
What Payqual does
Real-time alerts for deviations that require attention.
Correct
What the law requires
Justify or correct identified differences.
What Payqual does
Tools to record objective justifications.
Report
What the law requires
Submit the required reports to the regulator.
What Payqual does
Ready-made reports that meet all PTD requirements.
Payqual: compliant by design
Payqual offers a legally watertight, reproducible and transparent process that fully aligns with European and Dutch legislation.
- Objective job evaluation according to gender-neutral criteria
- Complete pay definition in accordance with the directive
- GDPR-proof processing with data minimisation
- Automatic reports for regulators
- Complete audit trail for inspections
Are you sure your organisation complies?
Discover how Payqual helps your organisation stay compliant with pay transparency legislation, without legal risks.