How the EU Pay Transparency Directive Impacts the Tech Sector

The EU Pay Transparency Directive is no longer just a headline—it’s set to reshape how tech companies hire, pay, and retain talent across Europe. As the race for skilled tech professionals intensifies, companies that fail to act risk not only non-compliance but also losing credibility in a hyper-competitive market. With 2025 coming to a close, HR teams face a crucial window to prepare for a directive that will redefine pay transparency and equity in 2026.

Key Takeaways:

The first report will reflect 2026 pay data, making early preparation essential.
Salary ranges must be disclosed in job advertisements, and salary history cannot be requested.

Gender pay gap reporting applies to companies with 100+ employees, with joint assessments required if gaps exceed 5%.
Transparency requirements are likely to influence recruitment, data systems, and corporate reputation.

Technology moves fast, with workforce changes, variable pay, and rapid growth all affecting compensation data. At the same time, the tech sector continues to face gender pay gaps, diversity challenges, and complex pay structures. The directive introduces new transparency and accountability requirements, aimed at reducing unjustified pay disparities and promoting equitable compensation practices.

Main Obligations

Tech companies face unique challenges: variable pay, equity compensation, and cross-border teams make transparent pay practices complex. However, these challenges also present an opportunity to stand out as an employer that values fairness, equity, and trust.

Mandatory gender pay gap reporting
Companies with 250+ employees must report annually from June 2027, using 2026 pay data
Companies with 100–249 employees will report every three years from June 2031, using 2030 data
Joint pay assessments: Required if a gender pay gap of 5% or more cannot be objectively justified

Salary transparency: Salary ranges must be disclosed in job advertisements; salary history cannot be requested
Pay discussion rights: Employees may freely discuss their salaries
Objective pay criteria: Pay and progression decisions must be based on gender-neutral, objective factors
Shift in burden of proof: Employers must demonstrate that pay differences are not discriminatory

Implications for the Tech Industry

While the directive applies to all qualifying employers, it can have particularly significant operational implications for tech companies, which often manage complex pay structures across multiple regions.

Key areas of impact include:

Recruitment and Talent: Salary transparency provides clarity for candidates and may influence hiring practices and negotiations
Data and Reporting: Accurate, auditable pay data across roles, departments, and countries is essential for compliance
Corporate Accountability: Transparency requirements may affect corporate reputation, employee perceptions, and investor attention

Why the Directive Matters

The EU directive addresses ongoing gender disparities in the tech industry. Despite comprising roughly 25% of the workforce, women continue to face significant challenges:

Wage Disparities: Women in tech earn about 82 cents for every dollar earned by their male counterparts, with larger gaps at senior levels (womentech.net).
Underrepresentation in Leadership: Women hold just 20.2% of CTO positions and 25.8% of CEO roles in mid-market tech firms (grantthornton.global).

High Attrition Rates: Over half of women in tech leave the industry by mid-career, more than twice the rate of men (sciencespo.fr).
Bias and Discrimination: Nearly 73% of women in tech report experiencing gender bias, affecting career progression (spr.com).

These statistics highlight the persistent challenges women face in tech and underscore why the directive seeks to create measurable accountability. By requiring companies to collect and report detailed pay data, the EU aims to reveal disparities that might otherwise go unnoticed and provide a foundation for more informed, equitable pay decisions.

Experience from other countries indicates these measures may help reduce pay disparities:

Iceland: Since 2018, companies with 25+ employees must obtain government certification for equal pay. This has contributed to Iceland consistently ranking as the world’s most gender-equal country, though gaps remain in sectors like finance and insurance.
Germany: The 2017 Transparency in Wage Structures Act requires companies with over 500 employees to conduct gender equality and equal pay reports every 3–5 years.
Sweden: Longstanding laws prohibit wage discrimination based on gender, with mandatory pay surveys to detect and prevent gaps.

These examples suggest that consistent reporting and transparency can support progress toward pay equity, though challenges will remain.

HR Checklist

For HR professionals navigating the Directive, these points offer a useful overview of the main issues to consider.

Conduct a full pay audit by job category and gender.
Establish or update pay bands and objective pay criteria.
Include salary ranges in all job postings; remove requests for prior pay.
Ensure HR systems can generate required reports for 2026 data.
Train managers on transparent pay communication.
Use findings to strengthen employer brand and retention strategies.

Looking Ahead

As 2025 comes to a close, the EU Pay Transparency Directive is moving from planning to implementation, making the year ahead an important period for HR teams to observe its implications. With reporting obligations based on 2026 pay data taking effect by mid-2027, organisations may benefit from reflecting on current pay structures, recruitment practices, and how pay decisions are documented.

In tech companies, variable pay, equity compensation, and international teams can add complexity to transparency efforts. Considering these factors now can help organisations anticipate challenges and explore ways to strengthen fairness and clarity in pay practices.

Taking time to reflect on these areas can provide valuable insights and help ensure a smoother adaptation to the Directive in 2026.

At TechHeads, we’re happy to talk through these changes with our clients and consider what they could mean for their organisations.