Pay transparency in Europe: what does the new law mean for employers and employees?

This is part of a broader shift we’re seeing in the labour market: job ads with salary ranges, colleagues speaking more openly about pay, and employers reviewing their reward policies. This is no coincidence. From 2026, a new pay transparency law will come into force across Europe. But what does this actually mean for you?

What exactly is pay transparency?

Pay transparency means that salaries must be clearer, fairer and easier to explain. The goal? To reduce unjustified pay gaps and strengthen equal pay for work of equal value. This is not about making individual salaries public, but about transparent and objective criteria.

How will pay transparency affect recruitment and pay?

One of the most visible changes takes place during the recruitment process. Employers will be required to inform candidates earlier and more clearly about the salary linked to a role. This means that a starting salary or salary range must be shared before the interview, and vague descriptions such as “competitive salary” will gradually disappear. At the same time, looking back is no longer allowed: asking candidates about their previous salary will be prohibited. This aims to prevent existing pay gaps from being carried over from one job to the next.

Things also change for people who are already in work. Employees gain more insight into how their salary is determined and which criteria play a role, like experience, responsibilities, job level or growth opportunities. They will also be able to request information on how their pay compares to similar roles, always based on aggregated and anonymous data. This makes pay policies not only more transparent, but also better substantiated and easier to discuss.

For employers, pay transparency means moving away from ad hoc pay decisions towards a more structured approach. Clear job descriptions, objective and gender-neutral criteria, and well-founded salary ranges become essential. For larger organisations, formal pay gap reporting requirements will also apply. While this may feel like extra regulation, many employers see it as an opportunity to professionalise their reward policy and strengthen trust with current and future employees.

Why labour market data becomes even more important

Transparency only works if salaries are aligned with the market. Wondering whether your salary is still in line with the market? Or which roles and sectors are currently under pressure? The Hays Salary Guide offers a clear overview of salaries, trends and labour market developments per sector and role. It gives you not just the numbers, but also the context you need to make better career and pay decisions.

In the new Hays Salary Guide, launching later this year, we analyse salaries and labour market trends across sectors, with a particular focus on themes such as pay transparency. A practical guide for anyone who wants to be prepared for what lies ahead.