Disclaimer: The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of WERC.
The EU Pay Transparency Directive (2023/970), adopted in May 2023, marks a significant legislative step toward reducing the gender pay gap across the European Union. It sets out ambitious obligations for employers—from salary transparency during recruitment to detailed pay gap reporting and justification of disparities. While much of the attention so far has been on national HR and reward functions, the implications for global mobility could be just as significant.
The deadline for member states to transpose the directive into national legislation is 7 June 2026. However, with the first reporting cycle for large employers beginning in 2027—based on 2026 data—time is already running short. Organizations must begin aligning their global mobility practices now to ensure compliance and transparency.
What the Directive Requires and Why It Matters for Mobility
At its core, the directive aims to enforce equal pay for equal work through greater transparency. It requires employers to disclose salary ranges, bans questions about salary history during recruitment, and gives employees the right to request average pay levels, broken down by gender. Larger employers (250+ employees) will also need to report on pay gaps within job categories and conduct joint pay assessments when unjustified differences persist.
Though these measures are designed to promote fairness, they introduce significant challenges in the context of international mobility. Expatriate compensation—often bespoke, complex, and handled outside of standard frameworks—will come under renewed scrutiny. The directive applies to all “workers” in the EU, regardless of origin, contract type, or where they are on the payroll.
Even if an employee is on a home-country payroll, they may still fall within the host country’s scope for reporting, depending on contractual arrangements and national implementation.
Varying National Rules, Varying Consequences
While the directive provides a harmonized legal framework, its actual impact will depend on how each member state transposes and enforces it. The directive leaves room for interpretation on critical elements—such as the reporting threshold, the definition of “pay,” enforcement procedures, and how cross-border employment arrangements are treated. This results in no single roadmap to compliance.
Across the EU, implementation is progressing at different speeds. Some countries, such as the Netherlands and Ireland, have already submitted legislative proposals that closely follow the directive’s text. These include measures like mandatory salary transparency in job ads, a ban on asking for salary history, and the right to request pay data by gender. The Dutch proposal goes further than the directive by setting the reporting threshold at 100 employees instead of 250.
Other member states are building on existing frameworks. Sweden, for example, is integrating the directive into its established pay transparency system, while Germany is expected to overhaul its 2017 Remuneration Transparency Act, which has seen limited enforcement to date. Poland is still in early legislative stages, with a draft under discussion but not yet formally introduced.
For global mobility professionals managing talent across borders, this fragmented rollout adds complexity. Internal transfers may now trigger different obligations depending on the host country, making it harder to apply consistent policies for expatriate pay and mobility-related allowances.
Global Mobility Under the Spotlight
The reality is that expatriates have traditionally operated in compensation structures that fall outside standardized job grading systems. Housing allowances, cost-of-living adjustments, tax equalization, and education support are often negotiated on a case-by-case basis. Under the new directive, this flexibility could be perceived as opacity, especially if such benefits disproportionately favor one gender or cannot be explained in objective, gender-neutral terms.
Mobility packages will need to be more clearly documented, and companies should be prepared to explain how assignment-related benefits are separated from base salary. In some cases, ad hoc exceptions or last-minute uplifts to secure a move—previously seen as harmless—may distort pay reporting and trigger questions from regulators, employees, or the public.
Moreover, if unexplained gaps exceed 5% and persist over time, companies may be required to conduct joint pay assessments with employee representatives. While this process is intended to promote fairness, it can be administratively burdensome and reputationally sensitive, particularly if expatriate compensation stands out.
Taking Action Without Overreacting
Although full implementation is still in progress, global mobility teams should not wait for national laws to be finalized before taking action. A practical first step is to improve visibility over expatriate compensation—especially for local and local-plus packages—and assess how this information is captured, classified, and reported.
Mobility policies should be reviewed for clarity and consistency. When are allowances granted? How are exceptions tracked? Do current practices reflect a consistent philosophy, or are they shaped more by precedent and urgency?
This is also the time to connect with wider HR and diversity, equity, and inclusion initiatives. Global mobility must not operate in isolation—its reward practices will soon be subject to the same scrutiny as any other business unit.