Pay transparency revolution: Driving equal pay and group workforce litigation

The EU Pay Transparency Directive (PTD) is not just another compliance exercise. It represents a fundamental shift in how employers disclose, justify and defend pay practices across the EU. Following on from our 2026 trends report, we are diving into the topic of pay transparency and equal pay with a series of blog posts.

As pay practices become increasingly transparent and legally contestable, employers will face a revolution that will accelerate equal pay enforcement and potentially fuel group workforce litigation. In this first blog post, we focus on a few aspects of this revolution.

From transparency to equal pay

At its heart, the PTD is designed to enforce the principle of equal pay for equal work or work of equal value – a cornerstone of EU labour law that, despite having long-standing legal standing, has proved difficult to enforce in practice. The PTD’s pre-employment and workforce disclosure requirements include the following. 

• Employers must provide salary information (starting pay or pay range) to job applicants before the interview or at the earliest practicable stage.
• Employers are prohibited from asking applicants about their current or previous pay, a shift designed to prevent historical pay discrimination from seeping into future offers.
• Current workers and their representatives gain rights to access average pay levels broken down by gender for comparable roles, and access to the criteria used to determine pay and progression.
• Employers must ensure vacancy notices and recruitment processes are gender-neutral and non-discriminatory.

These requirements are not simply procedural checkboxes but tools that enable employees and applicants to evaluate whether they are being offered fair and lawful pay, setting the stage for potential legal claims where discrimination is suspected. One of the most transformative aspects of the PTD is how it rises above mere disclosure to empower legal claims. Pay transparency shifts the burden of proof in pay discrimination cases – if evidence suggests unequal pay for equal work (or work of equal value), it is up to the employer to demonstrate that any differences arise from objective, gender-neutral criteria and not discriminatory practices.

This shift is significant. Without transparency, many potential equal pay claims never surface as employees often lack the information needed to assert their rights. With transparency entrenched in law and reporting, workers are more able to identify patterns of unequal pay across roles and file action. The PTD also prohibits pay secrecy clauses, further removing barriers that once prevented employees from discussing remuneration and coordinating claims.

But, the PTD doesn’t just end at individual claims. With the reinforcement of class actions, it allows collective claims on equal pay, enabling (groups of) workers and/or their representatives to bring cases on behalf of groups where disparities affect multiple employees. This trend mirrors developments in jurisdictions outside the EU (particularly, in the UK and North America) where pay transparency legislation has already fuelled class or group pay equity claims, particularly where employers failed to justify pay differences with solid objective criteria.

Reporting and joint assessments: A new legal minefield

Beyond individual access rights, the PTD will also require many employers to report gender pay gaps annually (or every three years, depending on headcount) and, importantly, to carry out a joint pay assessment with employee representatives if unjustified gaps exceed 5%. These obligations represent early detection tools for systemic pay inequality, but also create triggers for litigation and regulatory scrutiny where gaps are identified but not remedied within required timelines.

Our 2026 trends report underscores how these obligations contribute to a broader metamorphosis – pay transparency isn’t an isolated rule but part of a broader legal ecosystem that includes data reporting, internal audits, gender-neutral pay structures and employee engagement.

A global trend

Outside the EU, pay transparency and equal pay initiatives are rapidly taking hold across several major jurisdictions. 

In the US, there is a marked trend towards increased scrutiny of compensation practices, with employees actively comparing pay across business units and geographical locations. This heightened awareness, coupled with new legal requirements, is prompting a rise in challenges brought under both federal and state law. States such as California, New York, and Washington now mandate the disclosure of salary ranges in job postings, and some even require employers to report pay data to government agencies.

Asia, while not yet subject to comprehensive pay transparency laws, is nonetheless experiencing a groundswell of activity. Japan and South Korea have each moved to introduce gender equality reporting obligations, while Hong Kong’s Equal Opportunities Commission is placing an increased emphasis on promoting pay equity. These early steps suggest that the region is poised for significant regulatory developments in the coming years.

Turning to the UK, recent proposals indicate a clear movement towards enhanced pay transparency. Notably, from 2027, the UK Employment Rights Act will require employers to develop and publish action plans setting out how they intend to tackle their gender pay gap. In parallel, the Equality (Race and Disability) Bill – which, though promised, has yet to materialise – would introduce mandatory ethnicity and disability pay gap reporting for large employers, extend equal pay claims on the basis of race and disability, and allow outsourced workers to compare their pay and conditions with directly employed counterparts.

Perhaps most significantly, the UK has witnessed a pronounced surge in equal pay litigation in recent years. Where such claims were once the preserve of the public sector, mass equal pay litigation has now become increasingly prevalent in the private sector. The ability to bring claims on a collective basis fundamentally alters the litigation landscape, increasing both financial and reputational risks for employers. As the regulatory framework tightens and disclosure requirements increase, we expect to see a further rise in group workforce litigation in 2026 and beyond. 

Preparing for the litigation wave

In 2026, employers must recognise that the transparency revolution is a double-edged sword. On the one hand, transparent pay practices can build trust and attract talent in a competitive market. On the other, they expose organisations to legal challenge where inconsistencies or discriminatory pay structures persist. Employers should embed pay equity analysis, comprehensive job evaluation systems and robust documentation into their HR frameworks to support defensible pay decisions.

The pay transparency revolution is not a passing regulatory trend, it’s a structural shift towards open, accountable and equitable pay systems. As disclosure becomes the norm, equal pay enforcement and group workforce litigation will become far more prominent features of the European employment landscape. Employers who treat transparency as strategic rather than burdensome will be best placed to navigate both compliance and litigation risk in the years ahead.