The Pay Transparency Directive celebrates its 3rd anniversary on 10 May, and there is now hardly any company that has not encountered the topic in some form. Although one year remains until its general application, there are already employer obligations that must be complied with. Even if the local rules for applying the Directive in Hungary are still unknown.
What is pay transparency and why do we need rules for it?
All employers are familiar with the tensions arising from differences in pay between men and women for the same work, along with their disadvantages. Although the level of gender pay discrimination decreases year by year, in 2025 in Hungary women’s salaries were still on average 13–14% lower than men’s.
The Directive now aims to strengthen the enforcement of the principle of equal pay for equal work, the prohibition of direct and indirect pay discrimination, and pay transparency. One important innovation of the Directive is that “equal work” is not limited to identical job roles (positions) but also covers pay differences between positions of comparable value.
Beyond statutory obligations, a transparent and well-defined remuneration policy can also serve as a positive motivator, as it increases employees’ well-being and trust towards their employer. It is therefore also in the employers’ interest to apply transparent and non-discriminatory pay practices, as those who fail to do so may lose valuable talent. Increasing transparency will thus also become a matter of competitiveness in the future, as employees will more consciously choose employers where the remuneration system is predictable and fair.
Who is affected? Everyone!
The rules apply to all employers, regardless of sector, ownership structure, or even the contractual form of employment (part-time workers, platform workers, agency workers, employees under simplified employment arrangements, etc.).
The principles of gender neutrality and equal pay will also apply during recruitment. The Directive explicitly prohibits requesting information on the candidates’ previous salaries, thereby reducing the risk of perpetuating past discrimination, which typically affects female employees.
What does pay transparency require from employers in practice?
Pay transparency will impose several practical obligations on employers. Employees must be informed of their own pay level and the average pay level of colleagues performing the same or equivalent work, broken down by gender. Pay level information must be provided by job categories. Furthermore, information must be provided on how and based on what criteria the employer decides on salaries and pay raises—and these criteria must be objective and gender-neutral. Transparency extends to all forms of remuneration received in connection with employment, including salaries and benefits, as well as fixed and variable pay elements.
In practice, this also means that employers must develop an objective, documented job evaluation system capable of substantiating the lawfulness of any pay differences.
An important new obligation is that candidates must be informed of the starting salary range for the position, or how it is determined, already in the job advertisement or at the latest before the first interview.
Work starts now
All employers will be required to comply with the rules, regardless of headcount. Moreover, employers with more than 100 employees will not only be required to apply pay transparency requirements but will also have to report on them.
What is certain is that the first reports must be prepared by 7 June 2027 by companies employing more than 150 employees. Thereafter, companies with 250 or more employees must report annually, while companies employing between 150 and 249 employees must report every three years on the previous period. However, the subject of the first report in 2027 will be the current year, 2026, so it is advisable for companies to already take steps to review and, if necessary, adjust their pay structures.
Employers with more than 100 but fewer than 150 employees will first prepare mandatory reports in 2031. However, future Hungarian legislation may also impose reporting obligations on employers with fewer than 100 employees, for whom reporting is voluntary under the Directive.
If, based on the reports, the gender pays gap reaches or exceeds 5% and cannot be justified by objective factors, the employer must carry out a joint pay assessment together with employee representatives.
Employers that have not yet begun preparations should now start developing the necessary policies, including analysing gender-based pay data and pay bands, defining benefits and variable pay elements beyond base salaries, and mapping the proportion of female and male employees across different categories. This can serve as the basis for fair and objective remuneration and enable employers to provide appropriate data to employees, thereby increasing their trust.
A holistic audit approach—integrating legal, HR, and data processing considerations—is recommended for preparation, as pay transparency is inextricably linked to both employee incentive frameworks and GDPR alignment.
