As of today, January 2, 2025, companies across Cyprus and the European Union (EU) are planning for the sweeping changes that are coming with the EU’s Pay Transparency Directive. Aimed at closing the gender pay gap, these new regulations bring significant compliance requirements for businesses — but also opportunities to build stronger, fairer organizations.
Key Dates and Deadlines
The Pay Transparency Directive officially entered into force on June 6, 2023, after approval by the EU Parliament and Council. EU member states, including Cyprus, have until June 2026 to transpose the directive into national legislation. While this might seem like ample time, the scope of these changes means companies must act now to ensure compliance.
What Is the Pay Transparency Directive?
This landmark directive is designed to enforce the principle of equal pay for equal work, tackling gender-based pay discrepancies. It builds on existing EU regulations and aligns with broader measures, such as the Corporate Sustainability Reporting Directive (CSRD).
Employers with at least 100 employees will face requirements to report on gender pay gaps. Companies employing:
- 250+ employees will report annually.
- 150–249 employees will report every three years.
For organizations with a gender pay gap exceeding 5%, additional obligations include collaboration with employee representatives to analyze the gap and develop corrective action plans.
Key provisions include:
- Salary transparency in job ads: Employers must disclose pay ranges for advertised roles and cannot ask candidates about current or past pay.
- Pay secrecy banned: Employees can freely disclose their pay details without restriction.
- Objective criteria required: Pay and promotion decisions must be based on transparent, gender-neutral criteria, not subjective judgment.
Why It Matters for Cyprus Businesses
Cyprus, as an EU member, is bound by the directive and must adopt it into national legislation. Local businesses — particularly those without robust pay equity or evaluation frameworks — will face substantial changes. However, with proactive planning, these changes can drive long-term benefits.
Action Plan for Employers
To comply with the directive, employers should evaluate their current practices and identify gaps. Start by considering:
- Job Evaluation Systems
Are your pay structures based on clear, analytical methodologies? Gender-neutral evaluation tools will be essential. - Promotion and Pay Policies
Are your reward and progression frameworks transparent and fair? Employees will demand clarity. - Gender Pay Gap Assessments
Have you analyzed your pay gap? If it exceeds 5%, you’ll need a clear plan to address it. - Performance Management Systems
Are pay differentials linked to demonstrable performance? Documentation and consistency will be critical. - Market Data Usage
Can you justify pay differences with current, reliable market data? - Impact on Current Employees
How will public pay transparency affect internal morale? Transparency in job ads could raise concerns among existing employees.
Beyond Compliance: The Business Case for Pay Transparency
While compliance is mandatory, businesses can gain significant advantages from embracing pay transparency:
- Enhanced Talent Attraction and Retention: Transparent pay policies build trust with employees and candidates.
- Improved DE&I Outcomes: Alignment with broader diversity, equity, and inclusion goals strengthens organizational culture.
- ESG Integration: Transparent pay aligns with environmental, social, and governance (ESG) principles, boosting reputational value.
Next Steps for Cyprus Businesses
Leaders must start preparing now to ensure a seamless transition by 2026. Here’s how:
- Brief leadership teams and raise awareness of the directive.
- Conduct a full audit of existing pay practices and policies.
- Develop an action plan to address gaps, including revising pay structures and implementing new reporting systems.
- Engage employees in the process to foster trust and alignment.
Act Now to Lead the Change
The EU Pay Transparency Directive is not just a compliance exercise — it’s an opportunity to position your organization as a leader in fairness and transparency. By taking proactive steps today, Cyprus businesses can stay ahead of the curve, ensuring compliance while building stronger, more equitable workplaces for the future.
To support businesses in navigating the EU Pay Transparency Directive and building fairer workplaces, Emerald Zebra is offering free access to the Cyprus Salary and Job Satisfaction Survey. This comprehensive survey provides valuable insights into pay structures, job satisfaction, and employee trends across Cyprus-based organizations in the fintech, tech, financial services, and iGaming sectors. With robust data from both employers and employees, this resource empowers companies to benchmark their practices, identify gaps, and take actionable steps toward compliance and equity.
