Introduction: The End of Salary Secrecy in Europe
Pay transparency has ceased to be an ethical aspiration and has become a legal obligation. With the publication of Directive (EU) 2023/970, the European Parliament established a binding framework requiring all Member States to transpose rigorous pay transparency rules into national legislation by June 2026. For Human Resources departments in Portugal, this is not merely another European regulation: it is a structural transformation in how organisations manage, communicate and justify their remuneration policies.
Pay transparency means that companies can no longer treat salaries as confidential information between employer and employee. It demands clear salary grids, objective progression criteria and, above all, the elimination of unjustified pay gaps between men and women. Organisations that fail to prepare in time will face not only legal sanctions but significant reputational risk.
1. The Three Pillars of the Pay Transparency Directive
Directive (EU) 2023/970 rests upon three fundamental pillars that redefine the employer-employee relationship with regard to remuneration.
Transparency Before Hiring
Once transposed, employers will be obliged to disclose the expected salary range for each vacancy in job advertisements or, at a minimum, before the interview stage. Asking candidates about their salary history is prohibited. This pay transparency measure aims to eliminate the vicious cycle in which underpaid workers perpetuate their disadvantage when moving between employers.
Employees’ Right to Information
Employees gain the right to request information about average pay levels, disaggregated by gender, for categories of workers performing equal work or work of equal value. This pay transparency pillar compels organisations to maintain robust and auditable job classification systems.
Gender Pay Gap Reporting
Companies with 100 or more employees will be required to report periodically on their gender pay gaps. Where the difference exceeds 5% and cannot be justified by objective, gender-neutral criteria, the organisation must conduct a joint pay assessment with employee representatives. This 5% threshold represents the most transformative mechanism in European pay transparency legislation.
2. Why Excel No Longer Suffices: The Legal Risk of Manual Salary Management
For decades, thousands of Portuguese companies managed their remuneration policies through scattered spreadsheets, non-standardised tables and informal decisions by line managers. This artisanal model has become, with the pay transparency Directive, a concrete legal risk.
Manual salary management presents critical vulnerabilities against the new requirements: absence of an auditable historical record, inability to generate automatic disparity reports, dependence on institutional memory to justify pay differences, and vulnerability to human error in applying progression criteria.
According to Gartner’s CIO Agenda priorities for 2026, the automation of regulatory and compliance processes ranks amongst the top five technology priorities for European organisations. Pay transparency is undoubtedly one of the most pressing cases of this trend.
3. The Digital Response: How UnikPeople Ensures Compliance
The UnikPeople platform was designed precisely to address challenges such as those posed by the pay transparency Directive. By integrating career management, salary grids, performance evaluation and an employee portal into a single system, UnikPeople transforms regulatory compliance into a competitive advantage.
Career Structures and Salary Grids: UnikPeople enables the definition of professional categories, progression levels and salary ranges in a centralised, auditable manner. Every remuneration decision is recorded with its date, criteria and responsible party, ensuring the traceability required by pay transparency regulations.
Employee Portal with Salary Information Access: The self-service module allows employees to consult their position within the salary grid, applicable progression criteria and average levels for their category. This proactive pay transparency reduces labour disputes and strengthens organisational trust.
Automated Disparity Reports: The system automatically generates the gender pay gap reports required by the Directive, with disaggregation by category, seniority and qualification level. What previously required weeks of manual work in Excel becomes available at the click of a button.
As demonstrated in studies on automation and AI in HR across Portugal, organisations that digitalise their HR processes reduce administrative time by up to 40% and significantly improve their regulatory compliance capacity.
4. A 4-Step Preparation Plan
For Portuguese organisations to reach June 2026 in full compliance with the pay transparency Directive, a practical four-step roadmap is proposed.
Step 1 — Internal Salary Audit: Conduct a comprehensive diagnosis of current remuneration practices. Identify disparities between equivalent roles, map the criteria (both formal and informal) that determine salary progression and document all exceptions.
Step 2 — Job Advertisement Review: Adapt all recruitment processes to include salary ranges in vacancy announcements. Eliminate questions about candidates’ salary history. This is the most visible face of pay transparency and the easiest to implement.
Step 3 — Digitalise Salary Grids: Migrate remuneration management from scattered spreadsheets to an integrated platform such as UnikPeople. Centralise categories, levels, progression criteria and historical records in a single, auditable system.
Step 4 — Train Managers: Line managers are frequently the direct decision-makers regarding pay rises and promotions. Without adequate training on the new pay transparency requirements, even the best technological system will fail. Invest in practical workshops on objective remuneration criteria.
The HR investment priorities for 2026 confirm that regulatory compliance and process digitalisation are the two areas where return on investment is most immediate and measurable.
5. Timeline: From Preparation to Compliance
The pay transparency timeline is clear and non-negotiable:
Today (2025): Preparation phase. Internal audit, tool selection, team training. Organisations that act now will gain a competitive advantage in talent attraction.
June 2026: Deadline for national transposition. Portuguese legislation should be in force, with specific rules adapted to the national employment context.
2027 onwards: First mandatory reporting cycles. Companies with more than 250 employees report annually; the remainder (100-249) report every three years.
As noted by Deloitte in their analyses on proofs of concept, organisations that invest in technology pilots ahead of regulatory deadlines significantly reduce compliance costs and avoid emergency implementations.
Conclusion: Pay Transparency as a Strategic Advantage
Directive (EU) 2023/970 should not be viewed solely as a regulatory obligation. Organisations that embrace pay transparency as an organisational value — rather than a mere legal requirement — will position themselves as employers of choice in an increasingly competitive labour market.
Pay equity attracts talent, retains employees and strengthens corporate reputation. With platforms such as UnikPeople, compliance with the pay transparency Directive becomes a natural process integrated into everyday people management, rather than a last-minute emergency project.
The future of HR in Portugal lies in transparency, equity and digitalisation. Organisations that begin today will be ready tomorrow.
Appendix: Practical Pay Transparency Audit Checklist
Step 1 — Data Inventory
– List all roles and their current salary bands
– Identify data sources (payroll, contracts, amendments)
– Verify whether a single system exists or multiple scattered sources
Step 2 — Disparity Analysis
– Calculate the average pay gap between men and women by category
– Identify categories with a disparity exceeding 5%
– Document objective justifications for each identified disparity
Step 3 — Criteria Review
– Validate whether salary progression criteria are objective and measurable
– Eliminate subjective or potentially discriminatory criteria
– Align criteria with the job classification system
Step 4 — Action Plan
– Define correction priorities for unjustified disparities
– Establish a timeline for implementing digital salary grids
– Designate internal personnel responsible for pay transparency compliance
References:
– European Parliament (2023): Directive (EU) 2023/970 on pay transparency
– Gartner (2025): CIO Agenda — Technology Priorities for 2026
– Deloitte (2025): Global Human Capital Trends — Pay Equity and Transparency
– Uniksystem: UnikPeople — Human Capital Management Platform