Pay Transparency

Do not let the EU Pay Transparency Directive overwhelm you !

Our team is here to help you as you work through the detail of the EU Pay Transparency Directive, assess what it means for your organisation and help you navigate the steps towards compliance.

Remember, Malta has so far only partially transposed the EU Directive (read here) and is yet to fully transpose the Directive (which should occur by 7th June 2026). In the meantime, do not hold your breadth! You can (and should) get your house in order asap because Maltese law already includes the principle of equal pay for work of equal value and the new Directive does not re-invent the wheel, but it seriously ups the ante, imposing more obligations – particularly that of being more transparent about pay structures – and exposing unprepared employers to financial and reputational risk.

So, its on you to get prepared – but we are happy to help!

Key Questions

• Do your job descriptions reflect what your employees do on the ground?
• Do you have a grading structure that will allow you to compare and report by category of worker?
• Do we have gender neutral job structures?
• Are you ready to share pay ranges and approach to pay progression? 
• Are your managers prepared to address questions on compensation?
• Are you able to report in line with the mandatory requirements?
• Are you sure that you do not over-rely on market rates?
• Are you prepared to have transparent communication with employees?

BACKGROUND – CULTURE SHIFT

Transparency, fairness and being open about how people get paid is important in any workplace. Gone are those days when employers could force employees to shut up about their pay, or to intimidate them for asking about their pay and pay progression opportunities.

The idea of equal pay must be at the heart of any employer’s mind frame and culture, making sure that everyone who does work of equal value gets paid the same, no matter who they are, what their job title is or whether they have blue or brown eyes. Age is not quite relevant, in as much as sex and gender are irrelevant.

So, its time to grasp this law and convert it into an opportunity. Job candidates and employees will value transparency, and transparency will give you a cutting edge on the employment market.

MALTESE LAW (PRE-PAY TRANSPARENCY DIRECTIVE)

Maltese law is already aligned with some older EU directives, and in some respect extends beyond what EU Law requires. It already mandates equal pay for work of equal value regardless of gender or other protected characteristics.

This means that employees performing different roles/jobs may have a right to be paid at par on the basis of their roles/jobs having ‘equal value’. In this context, pay does not only include basic wage, but all forms of remuneration, including perks and fringe benefits.

Employers must ensure pay structures are transparent and non-discriminatory, which in practice entails some form of Pay Evaluation exercise to determine job categories for comparative purposes.

Currently, several Malta laws regulate equality at the workplace, mainly the:

1. Employment and Industrial Relations Act (“EIRA”) (Chapter 452)
2. The Equal Treatment in Employment Regulations (S.L.452.95) and
3. The Equality between Men and Women Act (Chapter 456).

These laws not only prohibit direct discrimination but also address indirect discriminatory treatment that cannot be objectively justified. In practice, this means employers are legally required to ensure that any differences in pay or employment conditions are based on legitimate, objective and non-discriminatory (gender neutral) criteria.

Remember, discrimination can be direct, or indirect – and can arise when candidates/employees are treated differently on the basis of a protective ground (such as, gender, age, disability etc), or generally (simply because the treatment is not justifiable in a democratic society).

BURDEN OF PROOF

The burden to prove that differential treatment is justified, or non-discriminatory, rests on the employer.

Equally the burden to prove that an employer’s pay structure complies with the principle of equal pay for work of equal value, rests squarely with the employer.

THE NEW EU PAY TRANSPARENCY DIRECTIVE (THE ‘DIRECTIVE’)

The new Directive applies to employers both in public and private sectors, including all workers who have an employment contract or employment relationship as defined by law, collective agreements and/or practice, temporary agency workers, as well as workers in management positions.

One of the core aims of the Directive is to combat pay discrimination and close the gender pay gap by:

• Defining key concepts;
• Introducing individual rights to pay transparency;
• Introducing reporting obligations;
• Providing for joint pay assessments;
• And strengthening enforcement mechanisms.

In summary, the EU Pay Transparency Directive has five key objectives: (i) job applicants must know pay ranges; (ii) employees can request pay data for comparable roles; (iii) criteria for pay and career progression must be clear and gender-neutral; (iv) large employers must report gender pay gaps; and (v) if a gap over 5% can’t be justified, a joint assessment is required.

MORE READING

• Click here to learn about the origins of the Directive

• Click here for more about (i) Transparency Obligations and (ii) Enforcement Obligations under the Directive.

• Click here  to learn how Maltese law currently regulates Equal Pay. 

• Click here to read a quick summary about a 2024 CJEU judgement on the subject of Equal Pay.

• Click here or here to read more about the EU 2022 Women on Boards Directive

GAP REPORTING

The new Directive brings about wider obligations for employers in terms of pay reporting and pay transparency, with an obligation to have clear pay structures, provide information to workers (and remind them of their rights).

Certain employers will be obliged to regularly compile and report on the gender gap within their organization as well as undertake joint pay assessments with unions or employee representatives.  

Reporting obligations (for companies with 100+ employees) will need (in time) to disclose:

• The gender pay gap (mean and median).
• The gender pay gap in complementary or variable components (e.g., bonuses) (mean and median).
• The proportion of female and male workers receiving complementary or variable components.
• The proportion of female and male workers in each pay quartile (dividing the workforce into four equal groups based on pay level).
• The gender pay gap between workers performing the same work or work of equal value, broken down by categories of workers.

As from June 2026, all employers in the EU must comply with its main requirements. Large companies with more than 250 employees will need to publish their gender pay gap reports every year. Companies with 150 to 249 employees will need to report every three years. Smaller companies with 100 to 149 employees will join the reporting obligation in 2031.

How we help: We conduct pay audits and Pay Evaluation exercises, advise on equitable remuneration policies, and support clients in defending or pursuing equal pay claims.