The New EU Pay Transparency Directive and What It Implies for Companies
June 2026
8 min. read
In 2025, 70% of job adverts published in Portugal included no mention of salary. Seven in ten vacancies asked for candidates without saying what they paid. This reflects a culture that, for decades, treated pay as a closed subject.
That time is coming to an end. On 7 June 2026, the EU Pay Transparency Directive (Directive (EU) 2023/970 of the European Parliament and of the Council) becomes mandatory across all EU Member States. For Portugal and the SMEs operating here, the changes come with a significant enforcement framework for non-compliance.
The numbers
This Directive was born from persistent data that resisted decades of good intentions.
According to the latest Eurostat figures, women in the EU earn on average 11% less per hour than men. The positive reading is that this figure has fallen (it stood at 16.2% in 2011). The harder truth is the pace: five percentage points in 13 years. At the current rate, full pay equality is still decades away.
And the gap doesn't stop at the pay slip. Its consequences extend further: the gender pension gap across the EU stands at 25%, according to the same Eurostat data. Lower pay throughout a career translates directly into lower protection at retirement.
11%
Average gender pay gap in the EU (Eurostat, 2024)
25%
Gender gap in EU pensions
(Eurostat, 2024)
The gap varies considerably across Member States. Portugal sits in the middle range. Estonia records the highest disparity in the EU at 18.8%, closely followed by the Czech Republic at 18.5%. At the other end, countries such as Luxembourg and Romania show the narrowest gaps.
The EU Council has identified four structural factors that feed this inequality,factors that no single law can eliminate on its own, but which pay transparency regulation aims to expose:
In 2018, 91% of career breaks taken to care for children were taken by women, with a direct impact on salary progression.
Men hold 64% of all management positions in the EU, i.e. roles typically associated with higher pay.
Women make up 66% of all part-time workers in the EU, a category linked to lower earnings and fewer opportunities for advancement.
Women account for 76% of workers in education, health and social services, sectors historically paid below average.
Portugal in numbers: what professionals say
The Hays Guide 2026, published in April and based on 1,359 responses from qualified professionals and 491 Portuguese employers (surveyed between November and December 2025), offers a clear snapshot of the current state of the national labour market on pay.
In 2025, 70% of job adverts in Portugal included no salary reference, at a time when 85% of professionals agreed that salary ranges should be disclosed in job postings.
70%
Job adverts in Portugal with no salary reference in 2025
85%
Professionals in favour of salary range disclosure in job ads
26%
Companies that disclose salary bands internally.
The opacity extends inside organisations too. Only 25% of professionals report that their company has defined criteria for salary increases. Just 26% say their employer discloses salary bands internally. The majority of Portuguese workers have no visibility into how progression works, what triggers a pay rise, or how the organisation's pay structure is built.
Pay is decisive: 62% of professionals say salary level is the main reason for declining a job offer. And 44% changed jobs or made significant career moves in the last 12 months, with lack of career progression as the leading reason (36%), followed by pay being too low (29%) and burnout or dissatisfaction (22%).
Those who stayed in the same job did so primarily for income and benefits stability (56%) or simply for lack of a better known alternative.
What changes with the new Directive
The Directive applies to all companies headquartered or operating in the EU, public and private, large and small. Obligations scale with company size, but no organisation is exempt.
In recruitment:
Job adverts must include an indicative salary range, or this information must be provided to the candidate before the job interview.
Asking candidates about their salary history is prohibited. Pay must be determined by the role and the company's own criteria, not by what the person earned before.
Job posting language must be gender-neutral.
Companies must make available to workers the objective criteria used to determine salary levels and career progression.
Reporting obligations:
Company size
Reporting obligations
250 + employees
Annual gender pay gap report, published from 2027 based on 2026 data.
150 - 249 employees
Triennial report (every 3 years); first submission due by 2031.
100 - 149 employees
Pay inequality assessment; corrective measures required if identified.
Under 100 employees
Exempt from formal reporting, but must comply with recruitment transparency rules and are prohibited from asking about salary history.
When the average gender pay gap exceeds 5% without objective justification, the company is required to carry out a joint pay assessment (with employee representatives) and present an action plan to address the situation. Workers also have the right to request information on average pay levels practised, and the company has 60 days to respond in writing.
A note for multinationals: for the first time, the Directive requires that not only base salary and incentives, but also pensions, benefits and other perks be factored into total remuneration comparisons.
Under the new Directive, in pay discrimination disputes based on gender, the burden of proof shifts. It is no longer the worker who must prove they were discriminated against. It is the company that must demonstrate no rules were violated. This reversal is one of the most significant legal changes and substantially increases litigation risk for organisations without documented, objective pay policies.
Situation in Europe
The Directive was adopted in 2023 with a three-year window for national transposition. By September 2025, with the deadline approaching, a report by law firm Addleshaw Goddard revealed worryingly slow progress: most EU countries were behind schedule, and several were at real risk of missing the date.
Advanced measures in place: Belgium, Poland, Malta, Ireland, Lithuania, Sweden, Germany (the Netherlands announced a postponement to January 2027).
Legislation in preparation: Cyprus, Slovakia, Spain, Estonia, Finland, France, Czech Republic, Romania.
No measures recorded (sept. 2025): Austria, Bulgaria, Croatia, Denmark, Greece, Hungary, Italy, Latvia, Luxembourg, Portugal (from 7 June 2026), Slovenia.
Portugal was, as of September 2025, among the 10 countries with no recorded transposition activity. That said, it is not starting from scratch: Lei n.º 60/2018, de 21 de august, already requires companies with more than 50 employees to have transparent pay policies and submit reports with remuneration data.
In early 2025, a working group was set up to prepare for transposition, and an EU-funded project coordinated by CITE is developing technical tools, including a gender-neutral job evaluation methodology.
Even without national legislation published at the time of writing, the Directive's obligations become binding on 7 June 2026. Rui Valente, an employment law specialist, wrote in the Expresso that the changes now arriving are "much more than a modification of old rules". They represent a new paradigm, one where the discretion that has long characterised pay policy gives way to an active duty of disclosure.
In Human Resources recruitment processes, the employer and the candidate sit on opposite sides of an interview table. It's worthwhile to know what they think.
53%
of European candidates consider salary the most important detail in a job advert (Michael Page)
70%
of global organisations agree candidates expect pay transparency (Mercer)
7%
of organisations in continental Europe have a pay transparency strategy today (Mercer)
These figures reveal an existing tension: professionals want transparency; companies acknowledge that expectation, but almost none are structured to meet it. Mercer found that organisations plan to scale salary range sharing at hiring from 60% to 94% over the next two years.
On the employer side, despite 47% of Portuguese organisations claiming they increased salaries between 2.5% and 5% over the past year, 42% of professionals say their pay remained unchanged over the same period. Perception may differ depending on which side of the table you sit. It is precisely this information gap that the new Directive sets out to close.
Benefits beyond compliance
Many businesses may initially see this Directive as yet another item on an already long compliance list. But reducing pay transparency to a tick-box exercise means missing the other half of the argument, which is quite valid.
1
Faster, more efficient recruitment
Job adverts with salary ranges shorten the hiring cycle. Candidates misaligned on pay expectations don't make it to interview, saving time and resources on both sides. In a market where 62% of professionals decline jobs over salary, putting that information upfront saves work for everyone.
2
Keeping the people who matter
According to the latest studies, 44% of professionals changed jobs in the last 12 months. Lack of progression is the number one reason. Clear, communicated pay criteria reduce uncertainty, and uncertainty is a key driver of turnover. Internal transparency is, in that sense, a retention tool.
3
Less friction, more focus
Pay uncertainty, as Rui Valente notes, has a real cost in terms of internal "social cohesion". Clear policies reduce friction. Less internal friction means more energy directed towards the business.
4
Stronger employer reputation
In a competitive talent market, particularly in technology, healthcare, financial services and engineering, the sectors topping Portuguese companies' hiring priorities, being known as a transparent employer is a differentiator that is beginning to matter to the best candidates.
Where to start
Map your starting point: How many employees do you have? Are job categories documented? Are there written criteria for pay progression? If these answers don't exist on paper, that's where to begin.
Review your job adverts: Include salary ranges. Regardless of whether the Directive has been formally transposed in Portugal, this is what 85% of professionals expect and it already represents a competitive advantage in recruitment.
Remove the salary history question: If it's still part of your hiring process, take it out now and avoid the risk of complaints.
Seek specialist advice before publishing any pay report: Handling remuneration data, defining comparable job categories, and aligning with data protection rules all carry legal implications that require careful analysis. A preventive approach is always worth more than remedying the consequences.
We help businesses prepare for pay transparency, from internal analysis to full compliance with the new legal obligations.
If you want to understand where your business stands today relative to this Directive, we are available to talk.
Your tax situation is not generic.
Neither is our approach.
If you'd like to review your current tax position, or simply understand what options are available to you, we're happy to have that conversation.
Or contact us directly:
+351 211 630 842 · help-desk@neolinkconsultingroup.com
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© 2026 Neo Link Consulting | Lisbon | Portugal
Our articles are for informational purposes only and do not replace professional advice.
The legislation, rates and rules referenced are those in force at the date of publication and are subject to change..