Why Is the Pay Transparency Directive necessary?

According to the to the reasoning of the directive, women in the EU earn on average 13% less than their male counterparts. That gender pay gap has largely stagnated over the past decade. This disparity is not only unjust but also distorts economic efficiency. The directive’s core objective is to increase pay transparency, thereby reducing unjustified gender pay gaps.

What are employers’ obligations under the Pay Transparency Directive?

The directive imposes significant new responsibilities on employers, including:

• Mandatory pay gap reporting: One of the directive’s central elements is the obligation to report on gender pay differences. Companies will be required to regularly disclose gender pay gap data, depending on their size. If a pay gap of more than 5% exists within the same role and cannot be justified by objective, gender-neutral criteria, employers must conduct a pay assessment and develop an action plan to reduce the gap. Importantly, “pay” includes not only base salary but also bonuses, allowances, benefits in kind, and even study leave entitlements.

• Transparency in recruitment: Employers will be required to inform job applicants of the pay range for the advertised position during the selection process. At the same time, it will be prohibited to ask candidates about their current or past salary.

• Pay transparency in internal communication: Employers must clearly communicate the criteria used to determine pay levels and progression. Employees will have the right to request information on how their salary compares to the average pay of colleagues performing equal or equivalent work. Perhaps most significantly, employers will no longer be allowed to prohibit employees from disclosing their own pay – a major cultural shift in many workplaces.

Strengthened enforcement and legal protections

The directive also introduces enhanced legal remedies for employees. Workers may be represented by external organisations in legal proceedings, and the burden of proof in pay discrimination cases will shift to the employer.

If gender-based pay discrimination is established, the directive mandates full compensation, covering both material and non-material damages. Member States will also be required to implement dissuasive penalties to ensure compliance.

How can employers prepare?

Compliance is not only a legal requirement but a strategic opportunity. Organisations also in Hungary should begin by evaluating their current practices: What would a role-by-role, gender-based pay analysis reveal? Do they have quantifiable data on all types of compensation, including bonuses and benefits?

To ensure compliance, employers may need to:

• review and revise job classification systems,
• formalise salary determination procedures,
• redesign recruitment and other HR processes.

They should also prepare to handle internal and external reporting duties, update employee communications, and review contracts and internal policies. Legal alignment with forthcoming national legislation will be critical.

The Pay Transparency Directive as an opportunity

While the directive certainly imposes new administrative and operational burdens, it also offers a unique opportunity to build a more equitable, transparent, and competitive workplace culture – one that can be a key advantage in today’s labour market. Early preparation is essential. The earlier employers begin, the smoother the transition will be.

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 provides general information and does not constitute advice.

A EU Pay Transparency Directive bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

The Reliable Employer title has been awarded by the DUIHK since 2017 to member companies that are exemplary and reliable in looking after their employees’ working and living conditions, and that meet the criteria developed by a professional jury.

The aim of the initiative is to encourage employers to create employee-friendly workplaces and, at the same time, to strengthen the labour market position of recognised companies in terms of employee retention and recruitment – supporting their employer branding efforts. Applicants are required to provide a detailed report on their HR management practices and the underlying principles. This year’s call for applications included new focus areas such as wage transparency, internal diversity and the integration of diverse employees, the “Whistleblower Protection Act”, and ESG.

The winners were announced at the DUIHK Member’s Meeting on 22 May. Among them, WTS Klient Hungary is now entitled to hold the Reliable Employer 2025–2027 title for three years, after which companies must requalify to retain the award. The recognition was accepted on behalf of WTS Klient Hungary by Gabriella Drávai, HR Director, from András Sávos, President of the DUIHK, and Dr. Ágnes Vörös, Managing Director of BASF Hungária Kft. and Chair of the Jury.

“Caring for our employees and creating a secure and lovable workplace has always been important at WTS Klient Hungary,” said Gabriella Drávai, accepting the award. “We are especially proud of this recognition because, after last year’s acquisitions, it was a much greater challenge to gain the trust and satisfaction of nearly 370 expert colleagues. It is important for us to support our team not only with modern tools and a knowledge base, but also with a wide range of well-being services – so they can work in a great atmosphere, with dedication and commitment. After all, it’s our colleagues whom not only our clients, but we ourselves can rely on,” she added.

WTS Klient Hungary has now received the Reliable Employer title for the third time, having previously been honoured in 2018–2019 and 2020–2021.

A WTS Klient receives Reliable Employer title for the third time bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

This year, for the eighth time, Hrpwr.hu, published by PPH Media, announced the HRkomm Award for Hungarian HR communication solutions and campaigns. In the competition, the professional jury rewarded the communication activities implemented in Hungary that were related to the employer’s activities and targeted potential or existing employees.

More than 100 nominations were received for this year’s HRkomm Award from the fields of HR communication, recruitment, employer branding and organisational development, and the jury took into account strategy, results and creativity.

This year for the first time, WTS Klient entered the HRkomm Award in the candidate experience category and won bronze for its entry “Unique Experience, Unique Team.” The experts on the judging panel highlighted our creative campaign elements, the videos produced by our ambassadors and our advertisements that really appeal to Generation Z.

“We also place a strong emphasis on the candidate experience in our recruitment process. From our advertisements to the interviews and to the day of entry, we strive to provide our candidates with a positive and memorable experience, and this effort has now been recognised by a professional jury with this award” – said Gabriella Drávai, HR Director of WTS Klient, who received the award together with Petra Szöllősy, HR Generalist of WTS Klient.

A HRkomm Award 2024: Bronze certification for WTS Klient bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Transformation in accounting

There is no denying that as one of the leading firms on the accounting services market, we (also) need to be at the forefront of digitalisation and robotisation, whilst being guided by prudence, awareness and proportionality. This is because it is not clear what is worth investing in with regard to technological development and robotisation.  For example, it recently transpired that OCR technology (text recognition) has become almost obsolete in the accounting profession thanks to online developments by the Hungarian tax authority (NAV) for processing domestic invoices. So global and local trends and paths need to be monitored, but delaying decisions can also have serious consequences, with the risk of falling permanently behind.

Our profession is undoubtedly undergoing a major transformation. The accountant of the future (and almost of the present) will no longer record data since bank transactions and client invoices are entered automatically, the data content of supplier invoices is downloaded from the NAV online database, and general ledger accounting items (salaries, depreciation, foreign currency revaluations, accruals and deferrals, taxes, etc.) can largely be entered and run in the accounting software.

At the same time, clients legitimately expect us not to lose our focus on personalisation and personal attention.

Robotisation in back-office systems

So how can we keep the personal touch, but also meet the demands of the times in using artificial intelligence, robotisation and the deployment of technology?

The answer is simple: we don’t put AI and robots on the front line, we let them operate more widely and under tight control in our back-office systems.

Today, most of our business divisions are already using, or have the potential to use, some form of artificial intelligence.

What specific development paths are emerging for WTS Klient Hungary?

• In addition to Excel macros, Power Pivot and Power Query, our outsourcing, financial advisory and controlling services have for years been backed by artificial intelligence-driven BI software (business intelligence), which can be integrated with both our in-house accounting systems and our clients’ ERP (enterprise resource planning) systems. In up-to-date accounting, the accounting dimensions employed alongside general ledger figures provide the basis – thanks to intelligent database use – for a dynamic dashboard interface that replaces the use of Excel-based controlling reports. Of course, in addition to financial information, structured information from other database-generating areas of the company, such as production or HR, can also be displayed on this interface to provide the client’s management with the comprehensive information they need to make decisions.

• One of the in-house software solutions used by our accounting division provides a complex document workflow and invoice approval system for complete, integrated and digital processing of supplier invoices. The solution, which also employs artificial intelligence, downloads our clients’ domestic invoice data from the NAV’s online system, and matches the data with the invoice or e-invoice data uploaded in scanned format to the client portal. The software automatically transfers the invoice image and data content to the invoice filing and authorisation system, from where it is sent to the accounting module in a pre-recorded format after digital client approval.

• In our tax advisory division, we are also considering the potential of robotisation and artificial intelligence in an increasing number of areas. These solutions can help in the area of compliance services, pre-screening certain financial comparables, tracking changes in legislation or monitoring tax liabilities. (For more information on these solutions please read the article by András Szadai.)

• In our own recruitment activity, artificial intelligence integrated into our HRM (human resource management) software supports our preboarding process by ranking candidates. The built-in artificial intelligence is trained with keywords and uses parameters to process and evaluate the information in incoming CVs. This kind of robotisation is of huge assistance to our HR department when processing large amounts of data.

Internal or external developments

As mentioned in one of our previous articles, today there are ready-made software solutions – so-called off-the-shelf solutions – for almost any need. But you can also choose to have your own solutions designed by external developers or by your own development team. There is no one-size-fits all solution, it is up to the company leaders and IT managers to figure out what best fits the means and objectives of the company. Mixed solutions are often viable too.

WTS Klient Hungary currently uses the above AI-enabled solutions not as part of in-house developments but by purchasing or leasing off-the-shelf software. That said, we are taking the necessary steps with technological improvements, efficiency gains and business automation through internally-driven RPA (robotic process automation, robotisation) and digitalisation year on year.

WTS Klient Hungary has been supporting the accounting and taxation managers of international companies for more than 25 years. Our professionals experienced in the areas of taxation, process design and IT solutions and well-versed in the world of automation and robotisation can assist you with harmonising diverse needs and designing digital systems affording you an advantage over your competitors. Our IT / Business Automation staff look forward to hearing from you if you need IT solutions to optimise your company’s processes.

A Practical applications of artificial intelligence and robotisation bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Given the state of emergency declared on 11 March 2020 in Hungary, this year the German-Hungarian Chamber of Industry and Commerce announced the companies winning the Reliable Employer title at an online Member’s Meeting. The title is awarded by the jury to companies that are exemplary in looking after their employees’ working and living conditions., i.e. those which comply with the conditions set forth by a professional committee for working and social conditions.

Applicants for the title must detail their corporate practices and the underlying guidelines in seven areas: remuneration, social and welfare benefits, health and working conditions, training and further education, and development opportunities. Tamás Steványik, spokesperson of the jury and HR director of ELMŰ-Émász Nyrt., stressed at the Members’ Meeting that receiving this title requires continuous care and attention from companies since the honour is only valid for two years, and companies need to prove themselves again thereafter. The list of this years’ awardees comprised several companies – including WTS Klient Hungary – who successfully applied for the title for a second time.

Members of the German-Hungarian Chamber of Industry and Commerce with registered offices in Hungary have been able to apply for the title of “Reliable Employer” on a continuous basis since 2017.

A WTS Klient awarded title of Reliable Employer again bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

As previously intimated on several occasions, the General Data Protection Regulation (GDPR) of the EU shall be mandatory and directly applicable in all Member States, including Hungary, from 25 May 2018. The GDPR is to pose new challenges for companies (employers), who have to review the legal framework to their data management practices in connection with their operations, and align them with the new data protection requirements. One key area of such reviews is HR activities and processes, and it is particularly important that these are legally compliant with GDPR (which primarily, but not exclusively, means avoiding the payment of penalties).

Reviewing HR activities and processes from a data protection perspective affects all stages of work relationships. Below we summarise the issues that constitute a legal risk in terms of data protection, and which typically arise upon examining employer procedures.

HR activities prior to employment

Even before recruitment you need to think about how to manage the data of job applicants. As we previously wrote it is important that data protection requirements are complied with when drafting job adverts too. The following problems tend to arise in connection with recruitment and selection in HR activities:

• employers do not prepare data protection information for the management of applicants’ personal data;
• as a form of preliminary screening HR looks at the social media profiles of applicants during the selection process, but fails to inform the applicants of this,
• employers fail to inform applicants that their applications were unsuccessful,
• after completing the selection process, employers continue to manage the data of the unselected applicants without their consent.

HR activities when starting and during employment

A whole range of data protection requirements have to be adhered to in Hungary both when starting to employ someone and during their employment. Employees have to be given appropriate information about the management of their personal information. In preparing for the GDPR it has to be examined whether the wording of the templates used by HR for employment contracts and employer information comply with GDPR requirements as well as other data protection rules in force.

If the employer uses technical devices – such as cameras or GPS navigation systems – to check on employees, then the employees have to be properly informed about this in line with prevailing legislation and GDPR requirements. The ways of checking use of company telephones, email addresses and laptops given to employees also have to be regulated. In light of the principle of transparency, the GDPR means that employer policies are becoming much more significant, so it is crucial that these documents be worded in line with current legislation and GDPR requirements, and that the texts comply with the GDPR.

HR activities after employment ends / is terminated

Data management is not something that ends upon the termination of employment relationships either, so it is important to know which personal data may, or has to be, managed and for how long, and on what legal grounds (lawfulness) – yet another task for HR.

Mapping the HR activities affecting these areas from a data protection perspective, reviewing and preparing the templates used for employment contracts, employer information documents and policies, and laying down good data management practices are all crucial for ensuring legal compliance with GDPR requirements.

If you are interested in checking whether your company’s HR activities and processes comply with GDPR requirements, please contact us and we will review your current practices in a data protection due diligence.

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A Review of HR activities and processes in Hungary based on GDPR bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.