Ireland is not alone in missing the June 7th deadline for transposing the European Union Pay Transparency Directive into national law. As Jennifer Cashman, partner and head of employment at RDJ LLP, notes: “Ireland is not unusual in confirming that it will miss the transposition deadline.”
In fact, many EU member states, including Croatia, Finland, France, and Spain, have yet to publish draft legislation. Notably, Sweden has stated it will not transpose the directive as it stands and will seek renegotiation. This widespread delay underscores the fact that Ireland’s position is typical among member states.
But being in good company offers only limited comfort. “The European Commission can trigger infringement procedures against any member states that have failed to transpose by the deadline, resulting in significant fines,” says Cashman.
Ireland has a history of this: it was fined €1.54 million for failing to fully transpose a separate directive on work-life balance on time.
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A survey of 500 employers carried out by Mason Hayes & Curran solicitors found that more than one in five Irish employers considered the incoming rules to be an unnecessary burden.
Stephen Browne, head of public affairs at Dublin Chamber, reflects a widely held view. “Businesses recognise the importance of transparency and fairness in the workplace, but firms are also operating in an increasingly complex regulatory environment, with growing compliance demands, particularly for SMEs. It will be important that implementation is practical, proportionate and supported by clear guidance for employers.”
Nichola Harkin, head of employment law services at Ibec, describes the directive as arguably the most significant piece of EU employment legislation in decades, with obligations going well beyond Ireland’s existing gender pay gap reporting requirements.
“The directive will introduce onerous obligations on employers to be transparent as regards pay and pay progression,” she says. “For example, it gives employees the right to request pay information on the average pay levels, broken down by gender, for categories of workers performing the same work or work of equal value, which must be furnished within two months of the request. Employers will need to categorise their employees and be able to justify any differences in pay on objective, gender-neutral criteria.”
Cashman sets out further obligations: employers must inform employees annually of their right to request pay information and respond within 60 days; where a gender pay gap of five per cent or more cannot be objectively justified within six months, a joint pay assessment with worker representatives will be required; and the burden of proof in equal pay claims will shift to the employer.
Compensation in successful claims will be unlimited. “This, along with the reputational damage that will arise from a successful claim against an organisation, will certainly act as a deterrent for many employers against running such claims,” Harkin cautions.
The most acute difficulty facing employers right now is not the scale of what is coming. It is that they are being asked to prepare for legislation that does not yet exist in Irish form.
“The biggest challenge facing employers is the absence of required detail, particularly around the carrying out of job categorisation,” says Harkin. “We know that employers are putting a huge amount of time and resources into this work. However, without the transposing legislation, tools and methodologies for carrying out job categorisation, it is very difficult for employers to adequately prepare.”
Cashman agrees. “To be fair to employers, they are left somewhat in limbo at present in the absence of even draft national legislation. A major piece of work for most employers will be in the categorisation of workers performing the same work or work of equal value. The EU-wide guidelines provide some helpful guidance here, but the more helpful guidance will be our national toolkit, once that is published, and the workshops that are expected on the back of that.”
The European Commission and the European Institute for Gender Equality published a step-by-step toolkit in March providing EU-wide guidelines on gender-neutral job evaluation and classification. The Department of Children, Disability and Equality is expected to use this as the framework for national guidelines, but national legislation itself remains some way off.
“Ibec is becoming increasingly concerned that costly mistakes may be made by employers in their good-faith efforts to prepare, given the lack of legislative clarity and guidance on many key provisions,” Harkin says. “We are very clear that employers will need adequate time after legislation is published to finalise their preparatory work and that they cannot be pushed into noncompliance due to insufficient clarity or time.”
There is no guidance from the Government as to what implementation on a phased basis means, says Cashman. “What we are expecting is that certain elements of the directive will be transposed before others. It is expected that one of the first will be article 5, which introduces a requirement for employers to provide information on salary levels in the recruitment process. In fact, when the General Scheme of the Equality (Miscellaneous Provisions) Bill 2024 was published, provision was made for an obligation on employers to provide information about salary levels in the job advertisement, which goes further than the directive.”
The Department of Children, Disability and Equality has indicated it is still considering recommendations from last year’s Pre-Legislative Scrutiny Report, meaning draft legislation remains some time away. “At the very least, employers must be given confirmation that provisions beyond pre-employment transparency obligations will not become law until June 7th, 2027, at the earliest,” says Harkin.
Despite its far-reaching scope, the directive does have its limitations when it comes to actual benefits. “The Pay Transparency Directive can play a role in achieving gender equality in the EU,” says Harkin. “However, as a tool for transparency, it can only address a narrow subset of the pay gap. Properly addressing the gender pay gap requires a whole-of-society approach, as many of the primary drivers remain outside the scope of employer-level transparency, including occupational segregation, educational opportunities and gender stereotypes.”
Cashman is nonetheless clear that significant changes lie ahead. “Whilst Ireland has already implemented many of the gender pay gap measures in the directive through existing legislation, that is only part of the story. There will be significant changes for employers arising from the directive in the recruitment stage; in the preparation of employment contracts and during employment, as employees will be entitled to seek certain pay information.” An increase in equal pay claims once the directive is fully implemented is, she says, inevitable.
“Employers should begin to at least consider categorisation and how that might be achieved,” Cashman advises. “Also, recruitment practices should be reviewed in light of the earliest expected measures around making salary levels available at the recruitment stage and the ban on asking candidates about previous pay history.”
“Employers recognise the importance of fair and transparent pay systems,” says Harkin. “They understand that equitable treatment is not only a matter of legal compliance, but a driver of employee trust, retention and long-term organisational success. But good intentions alone will not result in effective implementation. Employers must be equipped with the right information, tools and sufficient time to act. Anything less sets them up for failure.”
“The devil will be in the detail of our national legislation once published,” Cashman adds. “This directive and the national legislation to follow will be somewhat of a game changer in workplace transparency.”
