The EU Pay Transparency Directive will take effect from 7 June 2026. While the legislation is directed at EU member states, its influence is already reaching well beyond, with UK employers beginning to respond in anticipation of shifting norms and candidate expectations.

At the heart of the directive is a framework designed to improve pay transparency, reduce gender-based pay gaps, and create fairer processes around salary decisions and disclosures. It represents a significant shift in the employer-employee dynamic, with clarity and trust being placed at the centre of how organisations attract and retain talent.

What is the EU Pay Transparency Directive?

The EU Pay Transparency Directive is designed to close the gender pay gap by mandating pay transparency. It introduces several key measures, including:

• Banning pay secrecy clauses in employment contracts
• Requiring salary ranges to be clearly communicated and included in job ads 
• Prohibiting employers from asking applicants about their salary history
• Mandating regular pay reporting and audits for employers with over 100 employees
• Giving employees the right to request information on average pay levels for roles of equal value, broken down by gender

How should businesses prepare for the directive on pay transparency?

Even UK-based organisations, particularly those with EU operations or employees, should start aligning with the EU transparency directive. In doing so, they will stay ahead of the broader trend influencing candidate behaviour and employer reputation across the market.

Employers can prepare by:

• Reviewing pay structures and documentation – including job architecture, salary bands and progression policies – to ensure consistency and clarity
• Revisiting recruitment materials, particularly job advertisements, which will need to move away from ambiguous terms like “competitive” in favour of defined salary ranges
• Ensuring hiring frameworks reflect emerging candidate expectations, such as the right not to be asked about salary history and the removal of pay secrecy clauses
• Treating transparency as a brand asset, recognising its growing importance in how senior candidates assess an employer’s value proposition

The most competitive players are also thinking more strategically about their employer brand. Things like clearly mapped roles and salary bands, and an optimised candidate experience that centres on transparency, strengthens your competitiveness in the eyes of top talent.

Failing to act won’t carry legal consequences in the UK, but it may leave businesses open to scrutiny. Taking proactive steps now creates a real advantage, strengthening your reputation, widening your access to senior talent and signalling a culture that values fairness and clarity. For organisations competing at the top end of the market, that positioning makes a measurable difference.

What does the EU transparency law mean for candidates?

For executive candidates, the new EU transparency rules mean they will:

• Be better protected from pay discrimination and salary suppression tactics
• Be more informed about what a role is truly worth before engaging
• Have new rights to request and scrutinise salary data within their organisations

As this level of transparency becomes standard, candidates (especially at senior levels) will be carefully evaluating the principles behind the financial package. The most in-demand talent is already becoming increasingly selective, filtering out organisations that seem hesitant to adopt transparent practices.

This could tip the power scale, particularly in high-skill sectors where top candidates already have leverage. The more candidate-driven the market becomes, the more important it will be for businesses to think carefully about how they present themselves.

How Hanover is supporting businesses through the change

As executive search partners to organisations across the UK and internationally, Hanover is already helping clients align their hiring strategies with the new EU Pay Transparency Directive. 

We do this by:

• Conducting benchmarking and structural audits: Helping clients map job levels, identify discrepancies and match pay to performance and responsibility
• Building transparency into hiring strategy: Ensuring all candidate communications reflect up-to-date market data, clear expectations and fairness at every stage
• Monitoring the regulatory horizon: Staying ahead of upcoming reforms (including proposed UK legislation expanding pay equity to ethnicity and disability) and ensuring our clients are ready
• Reinforcing employer brands: Advising on how to use transparency as a market differentiator to appeal to sought-after talent, such as by developing role-specific salary frameworks and communicating them in candidate-facing materials 

Talk to us about your next steps

The EU Pay Transparency Directive will change the way pay is discussed, disclosed and delivered, but its impact won’t be limited to the EU. For UK businesses, this is a moment to reflect on how your organisation communicates value, builds trust with candidates and stays competitive in a fast-evolving talent market.

Hanover is ready to support you in that transition with the insight and strategic guidance that put you on the front foot. Reach out to me directly to start the conversation.