The EU deadline of 7 June 2026 for Member States to transpose the European Union’s Pay Transparency Directive (EU) 2023/970, into national legislation has now expired. Hungary has not yet implemented the directive, however, this by no means implies that Hungarian companies have no urgent tasks ahead.
Why can companies not sit back even without national legislation?
Despite Hungary missing the implementation deadline, the EU Pay Transparency Directive may from now on have a substantial impact on employers’ operations. In employment and discrimination disputes, after 7 June 2026 Hungarian courts must apply the principle of so-called “directive-consistent interpretation” even in the absence of specific national legislation, meaning that the objectives and principles of the directive must be taken into account in legal interpretation and enforcement.
This means that remuneration practices may be scrutinised based on increasingly strict standards, therefore:
- unjustified pay differences,
- non-transparent remuneration systems, and
- inadequately documented pay decisions
may represent growing legal and reputational risks for companies in the future.
Establishing an objective pay structure will be the greatest challenge
One of the most significant innovations introduced by the Pay Transparency Directive is the obligation to establish an objective pay structure. Even without detailed Hungarian implementing rules, the core provisions of the directive are already sufficiently detailed for companies to begin preparing for compliance and restructuring their remuneration systems.
Experience shows that – especially in the case of larger organisations – implementing a fully transparent and objective remuneration system may take several months, particularly where HR, compensation and legal processes are currently not harmonised.
What does this mean in practice?
The first step towards compliance is the detailed review and evaluation of existing positions based on objective criteria. Such criteria may include, for example:
- level of responsibility,
- required skills and competencies,
- effort associated with the work performed,
- professional experience,
- as well as working conditions.
Based on the outcome of this assessment, employers must identify equal or equivalent positions to which the principle of equal pay must apply.
In addition, companies will need to:
- establish transparent salary bands,
- define remuneration practices based on objective criteria,
- properly document pay decisions,
- and prepare for potential reporting and data disclosure obligations.
Transparency will also appear in recruitment processes: under the directive, employers must inform candidates about the starting salary or salary range applicable to the position, while asking applicants about their previous salary will be prohibited.
It affects every employer
It is particularly important to emphasise that pay transparency obligations do not apply only to multinational corporations or large enterprises. The directive will apply to all employers, regardless of whether they operate in the public or private sector, and irrespective of the number of employees they employ.
At the same time, compliance goes far beyond a simple legal obligation. Today, pay transparency is also a strategic, HR and employer branding issue. Organisations that review their remuneration systems, job structures and HR processes in time can not only reduce legal risks but also gain a competitive advantage in the labour market.
The experienced teams at WTS Klient Hungary and WTS Legal Hungary offer comprehensive support in all payroll, HR, and labour law matters related to the Pay Transparency Directive. If you need expert assistance, please don’t hesitate to contact us.
This article is for general information purposes only and should not be considered as advice.
