I. Objective and Systemic Approach of the Directive
One of the most important features of the regulation is that it is not merely declarative in nature, but establishes a directly enforceable system of substantive and procedural legal instruments. The focus is on the effective enforcement of the principle of “equal pay for equal work,” with particular regard to reducing gender pay disparities.
The legislator proceeds from the premise that pay discrimination is typically a hidden phenomenon; therefore, it introduces three interrelated mechanisms:
- ex ante transparency in recruitment and pay-setting processes,
- continuous monitoring (particularly for larger employers),
- ex post enforceability, supported by strong procedural safeguards.
This effectively introduces a compliance-based approach into labour law, which—beyond traditional individual disputes—requires organisational-level compliance.
Main objectives:
- effective enforcement of equal pay for equal work or work of equal value,
- reduction of the gender pay gap,
- increasing transparency of remuneration systems,
- removal of obstacles to enforcement (lack of information, evidentiary difficulties, fear of retaliation).
II. Conceptual Framework and Substantive Law Foundations
A key element of the Directive is the explicitly broad interpretation of the concept of “pay.” It includes not only base salary, but all forms of remuneration linked to the employment relationship, in particular:
- wage supplements,
- bonuses and rewards,
- benefits in kind,
- any monetary or non-monetary consideration.
In practice, this means that it is not sufficient to compare base salaries alone; the entire compensation structure must be assessed.
The definitions of “equal work” and “work of equal value” are also of central importance. Comparability must be ensured on the basis of objective, gender-neutral criteria, in particular:
- required skills,
- effort associated with the work,
- level of responsibility,
- working conditions.
Member States—including Hungary—will be required to provide a methodological framework to facilitate the identification of work of equal value. In practice, this may necessitate the introduction or review of job evaluation systems and frameworks.
III. Recruitment and Selection – Ex Ante Pay Transparency
One of the most visible changes concerns the recruitment process. In the future, applicants will be entitled to receive information about the remuneration for a position before applying, in at least one of the following forms:
- a specific starting base salary, or
- a predetermined salary range (with minimum–maximum values).
At the same time, the employer:
- may not inquire about the candidate’s previous salary,
- and may not use such information in determining pay.
Gender neutrality is also required in job advertisements and job titles. The clear aim of this regulation is to eliminate the phenomenon of “pay history perpetuation,” i.e. preventing previously set—potentially discriminatory—salary levels from carrying forward.
IV. Internal Pay Transparency and Employee Rights
During the employment relationship, employees are granted an explicit right to request information on pay conditions. This includes:
- data relating to their own pay, and
- the average pay levels, disaggregated by gender, of employees performing the same or work of equal value.
Employers are required to respond to such requests within a maximum of two months, in a clear, comprehensible, and verifiable manner.
An important change is that the traditional concept of “pay secrecy” becomes significantly restricted: employers may not prohibit employees from sharing pay information with each other, nor may any direct or indirect disadvantage be imposed for doing so.
V. Pay-Setting and Career Progression Systems
The regulation goes beyond individual rights and also imposes structural requirements. Employers must ensure that decisions regarding pay, pay increases, and promotions are based on:
- predefined,
- transparent,
- objective,
- and gender-neutral criteria.
In practice, this entails a comprehensive review of HR policies, internal regulations, and evaluation systems, particularly for medium-sized and large enterprises.
VI. Pay Reporting Obligations and the “5% Rule”
For larger employers, the Directive introduces a mandatory reporting system. Where the workforce exceeds 100 employees, regular reporting is required, including on:
- the gender pay gap;
- the proportion of female and male employees across pay quartiles;
- the gender pay gap by categories of employees, broken down by base salary and by complementary or variable components.
Of particular importance is the so-called 5% threshold: if the gender pay gap exceeds this level and cannot be justified by objective, gender-neutral reasons, the employer must conduct a joint pay assessment together with employee representatives. This constitutes not merely a reporting obligation, but an active corrective duty.
VII. Enforcement and Procedural Safeguards
One of the strongest elements of the Directive is the facilitation of enforcement. In this context:
- the burden of proof is reversed: it is not the employee who must prove discrimination, but the employer who must demonstrate that the pay difference is objective and lawful;
- employees are entitled to full compensation, covering unpaid wages, bonuses, benefits, and interest, without any upper limit;
- a strict prohibition of retaliation applies in relation to any enforcement action.
These rules are expected to significantly increase employer risks, particularly in litigation.
VIII. Scope, Transposition, and Relevance for Hungary
The Directive entered into force on 6 June 2023, with a final transposition deadline for Member States of 7 June 2026. Based on current information, Hungarian legislation is still in the preparatory phase; however, it is already clear that several areas of law will be affected, in particular:
- the Labour Code (rules on remuneration, information obligations, burden of proof),
- the procedural framework of the requirement of equal treatment,
- as well as employer HR and compliance practices.
Overall, this is not a narrowly defined amendment to labour law, but a comprehensive regulatory change that redefines the entire logic and documentation of pay-setting, while simultaneously significantly strengthening employee rights and increasing employers’ legal exposure.
