Does pay transparency affect your payroll? Here's what changes

Last updated: 15 September 2026

Yes. It doesn't change how salaries are paid. It changes what payroll must produce. Under the EU Pay Transparency Directive, a worker who asks about pay must get an answer within two months. Employers with 150 or more workers in an EU country must file their first gender pay gap report by 7 June 2027, per the Directive on EUR-Lex.

So the payroll run stays the same. What changes is the data around it. Each employee record needs a job category, a pay band and a clear reason for their pay. Your payroll system becomes the source for pay requests and pay gap reports.

The UK is separate. The EU directive does not apply to staff in Great Britain, and UK reporting uses different data rules, so we keep the two apart. For the directive itself, see our EU pay transparency hub.

The payroll data you'll need to produce

Much of this data already sits in payroll: basic pay, hours, bonuses and each person's sex. What is often missing is a job category and a pay band for every role. The table sets out the main duties and where the EU and the UK stand today.

The EU duties apply in a country once its own national law is in force. Most member states missed the 7 June 2026 deadline, so start dates vary. Check each country on our transposition tracker before you change a payroll process there.

Pay bands and job categories in your payroll system

Every employee needs to sit in a category of workers with a pay band attached. The directive defines a category as workers doing the same work or work of equal value, grouped using objective, gender-neutral criteria. Per Article 4 of the Directive, those criteria should include skills, effort, responsibility and working conditions.

This matters because pay requests, the category pay gap and the 5% test are all cut by category. A "Senior Engineer" in one team and a "Lead Developer" in another may be the same category. If that field is blank or messy, all three break.

Each record also needs basic pay kept apart from bonus and commission, and contracted hours so hourly pay can be worked out. Under the directive, pay includes anything paid in cash or in kind, so benefits in kind need a value too. Record the reason for each person's pay, tied to your written criteria, rather than what they earned before.

How do pay requests and pay gap reports use payroll data?

A worker can ask in writing for their own pay level and the average pay for their category, split by sex. You must reply within two months, per Article 7 of the Directive, and tell all workers about this right each year. Two months is short if the data sits across payroll, HR and a spreadsheet of bands, so treat the answer as a repeatable report.

The pay gap report is built from the same data. It covers the previous calendar year, so an employer with 150 or more workers, in a country whose law is in force, uses 2026 pay data for its June 2027 report. Per Article 9, it covers mean and median pay gaps, gaps in variable pay, pay quartiles and the gap for each category of workers.

Management must confirm the figures are accurate, after consulting workers' representatives. If a category shows an unexplained gap of 5% or more that isn't fixed within six months, a joint pay assessment follows. Our guide to pay transparency fines covers the risks.

Don't copy your UK gender pay gap method into an EU report. The two differ on the pay period, on benefits in kind and on the gap by category. Each EU country also sets its own detailed method, so what you need depends on where your people work.

The dates below are the ones to plan around, on both sides.

What about UK pay transparency law in 2026?

The UK has no version of the EU directive. Its main rule is gender pay gap reporting for employers with 250 or more employees in Great Britain. Per GOV.UK, private and voluntary employers take a snapshot of pay on 5 April and publish within a year. They report six measures, including the hourly pay gap, the bonus gap and pay quartiles.

Action plans come from the Employment Rights Act 2025. Per GOV.UK's action plan guidance, employers with 250 or more employees can publish one now. Plans become mandatory from spring 2027, subject to legislation. Ethnicity and disability pay gap reporting is planned for the same employers, but has no start date yet.

Pay ranges in job adverts may follow. The government's equal pay consultation, closing on 27 October 2026, proposes a legal duty to publish pay information in job adverts. Meanwhile, under section 77 of the Equality Act 2010, a contract term cannot stop staff discussing pay to find out whether there is pay discrimination.

What changes if you employ through an EOR?

If you employ through an Employer of Record (EOR), the EOR is the legal employer and runs payroll in that country. So the pay records sit with the EOR, but you still decide the pay, the band and the reasons behind them. Agree who handles pay requests, and where your bands and criteria are kept, before the first request lands.

The right set-up depends on your countries, your headcount and how your roles map to local categories of workers. For how EU rules reach UK companies, read our guide for UK firms using EORs.

Teamed can help you work through what pay transparency means for your team in each country. Talk to an Expert about your situation.

Frequently asked questions

Does pay transparency change how salaries are paid?

No. Pay dates, tax and social security stay the same. What changes is the data payroll must produce.

Do UK companies with EU staff have to comply?

Yes, for staff working in an EU country, once that country's law is in force. The rules follow the place of work, not your head office.

When is the first EU pay gap report due?

Employers with 150 or more workers report first by 7 June 2027, using 2026 data. Employers with 100 to 149 workers report first by 7 June 2031. National law can set lower thresholds, so check each country.