Pay Transparency: The EU Directive Is Here, but the Implementing Act Is Still Missing

Although the Directive should have been transposed into national law by 7 June 2026, the Austrian legislator is currently behind schedule with its implementation. Since the Directive is primarily addressed to the Member States, it generally does not have direct effect for companies and their employees (cf. Austrian Supreme Court, 22 April 2010, 8 ObA 58/09a).

A draft bill is currently circulating in political circles; however, the specific design of the future regulations remains the subject of intensive discussion. Key details – such as the formation of comparator groups or the modalities of providing information – have not yet been clarified.

Even though the Austrian implementing provisions are still pending, it is already foreseeable that companies will face expanded transparency, documentation and reporting obligations in the future. Against this backdrop, it is advisable to take proactive preparatory steps to meet the upcoming requirements. The following practical guidance and recommendations may assist companies and HR professionals in this regard.

Adapting Recruitment Processes to Pay Transparency Requirements

(Regardless of the number of employees in the company)

Recruitment Process: Review Procedures and Avoid Unnecessary Administrative Effort

Review recruitment processes and avoid unnecessary additional workload (e.g. by stating the salary range directly in the job advertisement, eliminating the need to provide separate information before the interview stage).

Job Advertisements

In the future, employers will be required to communicate the applicable salary range (“pay band”) for the specific position either in the job advertisement itself or, at the latest, before the job interview. Merely indicating the collective bargaining agreement (CBA) minimum salary together with a willingness to overpay will no longer be sufficient.

The salary range (from € … to € …) must be derived from the remuneration actually paid to employees within the relevant comparator group.

Interview Guidelines and Application Forms

Review interview guides and application forms for potentially impermissible questions. Questions such as:

• “What are you currently earning?”
• “What was your last salary or wage?”

will be prohibited in the future.

A recommended alternative would be:

• “What are your salary expectations?”

Job Interviews

Comprehensive documentation and the presence of a second internal company representative during interviews can significantly enhance legal certainty. This enables the company to more effectively protect itself against potential misrepresentations or disputed claims at a later stage.

Adapting Employment Contracts to Pay Transparency Requirements

(Regardless of the number of employees in the company)

Review of Employment Contracts

(Including any supplementary agreements and ancillary arrangements)

Going forward, confidentiality and non-disclosure obligations relating to an employee’s own remuneration will no longer be permissible. Such clauses should therefore no longer be included in new employment contracts.

Whether existing employment contracts must also be amended accordingly (i.e. whether such clauses must be removed from existing contracts) remains unresolved at this stage.

Where CBA overpayments or additional remuneration components are granted under the employment contract (e.g. bonuses, performance-related incentives or similar arrangements), companies should critically assess:

• the criteria under which these benefits are granted; and
• whether such criteria are objective, transparent and free from discrimination.

Preparing Organisationally for Future Information Requests

(Regardless of the number of employees in the company)

Under the EU Directive, employees making pay transparency requests are entitled to information based on annual gross remuneration. However, the corresponding right to information—covering both the requesting employee’s remuneration and the average remuneration of male and female employees within the same comparator group—will only become effective once incorporated into national legislation.

Nevertheless, companies are advised to begin preparations now for future employee pay transparency requests and establish appropriate processes and responsibilities, including:

• Preparing standardised response templates for employee information requests;
• Defining who will provide the required information and on the basis of which data and records;
• Identifying the individuals who should be involved in processing requests to explain any pay differences based on objective and reasonable criteria (e.g. the responsible line manager);
• Reviewing and, where necessary, cleansing master data records;
• Defining the comparator groups to be used for determining average remuneration levels.

The future obligation to inform employees annually about their right to request pay information could, in practice, be fulfilled through measures such as:

• a notice on the company intranet; or
• an annual company-wide email communication.

Pay Reports: Preparing Structures and Data Foundations

(Applicable to companies with 100 or more employees)

The existing income reports (currently mandatory for companies with at least 150 employees) will be replaced by more extensive pay reports, which will become mandatory for companies with 100 or more employees according to the following timetable:

Reporting Obligations

Companies employing on average:

• 250 or more employees must prepare a pay report annually starting with the reporting year 2026;
• 150 to 249 employees must prepare a pay report every three years starting with the reporting year 2026;
• 100 to 149 employees must prepare a pay report every three years starting with the reporting year 2030.

The pay report must be prepared no later than 7 June of the calendar year following the reporting year and submitted to the Austrian Federal Accounting Agency.

Content of the Pay Report

The report must include, in particular:

• indicators relating to the gender pay gap;
• data on variable remuneration components;
• the distribution of women and men across remuneration quartiles;
• remuneration comparisons within comparable employee groups.

Establishing a Transparent Pay Structure (Job Evaluation System)

Companies will require an internal reporting system capable of systematically capturing and analysing remuneration data. Comparator groups already established for the purpose of fulfilling information rights must be clearly defined to ensure an accurate calculation of the gender pay gap.

In practice, payroll, HR, controlling and IT functions will generally need to work together to ensure data quality and consistency. Companies should also consider implementing an appropriate software solution.

As an initial step, companies may orient themselves towards the employment classifications defined in the relevant collective bargaining agreement. However, the requirements applicable to an internal remuneration system extend well beyond these classifications.

Comparability may also exist between employees who do not belong to the same CBA classification group. Collective bargaining agreements do not always fully reflect the Directive’s assessment criteria, namely:

• skills,
• responsibilities,
• effort, and
• working conditions.

In addition, where remuneration exceeds collectively agreed levels, objective and transparent job evaluation systems are often lacking.

Examples of an internal job architecture include defining “job families” such as:

• Sales,
• Administration,
• Finance,
• Leadership/Management,

with different levels within each family based on qualifications, experience and other relevant factors.

Salary and wage decisions—both at the recruitment stage and in connection with subsequent salary increases—as well as promotions should be documented adequately, including the underlying decision-making criteria.

At present, the area of internal remuneration structures remains one of the most uncertain aspects of implementation. In particular, significant questions remain as to how “equal work” and “work of equal value” should be defined in practice. Consequently, further details of the Austrian legislative implementation must still be awaited.

Communication and Training for Managers, HR and Payroll Staff

• Develop an internal communication strategy on pay transparency.
• Inform managers, HR professionals and payroll staff about the new pay transparency requirements (e.g. employees’ new rights to information) and raise awareness of potential compliance risks.
• Consider preparing a company-specific FAQ document to address employees’ most common questions regarding pay transparency.