A major shift is on the horizon for the European labour market. The EU Pay Transparency Directive (2023/970) introduces binding rules aimed at closing the gender pay gap. All EU member states, including Cyprus, must incorporate the Directive into national law by 7 June 2026.
Transparency Starts at Recruitment
One of the most impactful changes will affect how companies approach hiring. Employers will be required to include the starting salary or salary range in job postings—or, at the very least, share this information with candidates before interviews. In addition, they will no longer be allowed to ask candidates about their current or previous salaries.
Gender-Neutral Language and Clear Criteria
Job advertisements and titles must be written using gender-neutral language. Employers will also need to ensure that salary structures and career progression criteria are transparent, objective, and easily accessible to all employees. Clear evaluation processes must be in place and consistently applied.
Reporting Requirements for Larger Employers
- Companies with more than 100 employees will be subject to new gender pay reporting obligations. This includes reporting on base salaries, bonuses, pay gaps across different roles, and average pay levels.
- Companies with over 250 employees must report annually.
- Companies with 100–249 employees must report every three years.
These reports will be published by the relevant authorities and made publicly available, enabling comparisons across companies and industries.
Action Required if Pay Gaps Are Found
If a gender pay gap of more than 5% is identified within a particular job category and cannot be objectively justified, the employer must take corrective action within six months. This process must involve consultation with employee representatives.
Shifting the Burden of Proof
In cases of alleged pay discrimination, the burden of proof will shift to the employer. In practice, this means that companies will need to show that their pay decisions were made using objective, gender-neutral criteria.
Steps Employers Should Take Now
Implementing the Directive will require thoughtful internal changes. Employers are encouraged to:
- Review their current pay structures and compensation policies
- Train HR teams on the new transparency obligations
- Strengthen systems for monitoring and analysing pay data
- Foster open and clear communication with employees
While compliance with the Directive will be a legal requirement, it also offers a valuable opportunity. Building a transparent and fair pay system enhances employee trust, strengthens your reputation, and supports long-term talent retention. Preparing now will make the transition smoother and more effective.
Rafaela Evgeniou
Associate
