The EU Pay Transparency Directive: What Cyprus Tech Employers Need to Prepare For

The EU Pay Transparency Directive (2023/970/EU) is one of the most significant pieces of employment legislation to affect the tech industry in years. Adopted in June 2023, it must be transposed into national law by EU member states — including Cyprus — by June 7, 2026. That deadline is approaching fast, and most Cyprus tech employers are significantly underprepared.

This article sets out exactly what the directive requires, what the penalties for non-compliance are, and what practical steps tech companies in Cyprus should be taking now.

What Is the EU Pay Transparency Directive?

Directive 2023/970/EU on Pay Transparency was passed to address the gender pay gap, which sits at around 13% across the EU — and higher in sectors including financial services and technology. The mechanism chosen was radical: rather than relying on pay audits after the fact, the directive requires transparency at every stage of the employment relationship: before hiring, during employment, and across the organisation as a whole.

For employers, this means a fundamental shift in how compensation is discussed, disclosed, and documented. The era of 'competitive salary' in job postings, secretive pay bands, and HR teams routinely refusing to discuss relative compensation is ending — by law.

The Five Key Requirements

1. Salary Information in Job Postings

Employers must provide information about the starting salary or salary range in every job posting, or before the job interview begins. The range must be based on objective, gender-neutral criteria. Employers cannot ask candidates what they currently earn or what their previous salary was — this prohibition is absolute.

This requirement alone will transform the job advertising landscape in Cyprus, where salary ranges are currently disclosed in fewer than 40% of tech job postings. CyprusTech.Jobs has required salary disclosure on all listings since launch — a policy that predates the directive but is now legally mandated.

2. Right to Pay Information for Employees

Current employees have the right to request information about their individual pay level and the average pay levels for workers doing the same work or work of equal value, broken down by gender. Employers must respond within two months and must inform employees annually of this right.

This is a significant change for most tech companies, where pay structures are typically opaque and managers are often instructed not to discuss salaries. The directive does not require full pay disclosure to all employees — it requires the right to request comparator data for specific roles. But that right will be exercised.

3. Pay Reporting Obligations

Companies with 250 or more employees must publish annual reports on the gender pay gap within their organisation, broken down by category of worker. Companies with 150–249 employees must publish every three years. Companies with 100–149 employees face the same three-year obligation from 2031. Companies under 100 employees are not subject to mandatory pay gap reporting, though they remain subject to all individual transparency requirements.

The reports must be submitted to a designated national authority and made publicly available. Non-compliant employers face investigation by the national equality body.

4. Joint Pay Assessments

Where a pay gap report reveals a gender pay gap of 5% or more in any category of worker, and the gap cannot be justified by objective, gender-neutral factors, employers must carry out a joint pay assessment in cooperation with employee representatives. The assessment must result in an action plan with concrete measures and a timeline.

For the tech sector specifically, where female representation in engineering roles is typically below 30%, this provision is likely to be triggered frequently. Employers that have not done pay equity analysis will find themselves in a difficult position when the reporting obligation materialises.

5. Effective Remedies and Burden of Proof

The directive reverses the burden of proof in pay discrimination cases: if an employee brings a claim, the employer must demonstrate that there was no pay discrimination. Employees are entitled to full compensation for damages, including back pay and compensation for lost opportunities. There is no cap on damages. Member states must ensure effective, proportionate, and dissuasive penalties — meaning significant fines for non-compliant employers.

The Practical Impact for Cyprus Tech Companies

The directive's requirements interact with the Cyprus tech market in specific and consequential ways.

International hiring practices must change

The prohibition on asking candidates about previous salary is significant for companies that have historically calibrated offers based on a candidate's stated current earnings. The practice of adjusting an offer downward because a candidate is relocating from a lower-cost country will no longer be permissible if it produces a gender pay gap. Salary bands need to be set by role and level — not by individual negotiation history.

Pay structures need to be formalised

Many fast-growing tech companies in Cyprus have informal or inconsistent pay structures — salaries were set opportunistically, based on candidate negotiation, at various points in the company's growth. Under the directive, an employee request for comparator pay information could expose these inconsistencies publicly. The time to audit and formalise your pay structure is before that request arrives.

HR and legal functions need updating

Job description templates need to include salary ranges. Recruitment policies need to remove any guidance on asking about current salary. HR systems need to be capable of generating the category-level gender pay gap reports the directive requires. Employment contracts and offer letters may need revision to reflect employees' new rights.

What You Should Be Doing Now

• Audit your current pay structure: Map every role to a level, establish salary bands for each level, and check whether bands are applied consistently. Flag outliers — particularly those that correlate with gender — for immediate attention.
• Update your job posting templates: Every posting, from today, should include a salary range. This is both a legal requirement from June 2026 and, as a practical matter, it significantly improves application quality and volume.
• Remove 'current salary' from your application forms and recruiter briefings: The prohibition on asking for this information is one of the directive's clearest provisions. Remove this question from all stages of the recruitment process now.
• Establish an internal right-to-pay-information process: Draft a clear policy covering how employees request pay comparator data, who responds, and what the response includes. This process will be tested from day one.
• Check whether you hit the reporting threshold: If your Cyprus headcount is at or near 100 employees, begin preparing for reporting obligations. The first reporting period for 250+ employee companies covers 2026 data.
• Engage legal and HR counsel now: The transposing legislation will contain Cyprus-specific details on enforcement, penalties, and procedural requirements. Engaging employment law counsel before the law is passed is better than scrambling afterwards.

The Business Case Beyond Compliance

It is worth noting that pay transparency, independently of the legal requirement, is consistently associated with better hiring outcomes. CyprusTech.Jobs has required salary disclosure since launch, and the data is clear: job postings with salary ranges receive significantly more applications than those without, and the applications that arrive are better qualified — because candidates who apply know the package works for them.

Pay transparency also reduces the gender pay gap — the very problem the directive is designed to address. When salary bands are published and applied consistently, the individual negotiation dynamics that systematically disadvantage women are removed. Companies that have done this voluntarily report both a narrower pay gap and a better candidate experience.

The directive is an opportunity, not just a compliance burden. Companies that treat it as such — using it as a forcing function to build fairer, more structured, more transparent compensation systems — will find that they are better at recruiting and retaining the talent they need in 2026 and beyond.

Key Dates to Put in Your Calendar

• June 7, 2026 — Transposition deadline: EU member states, including Cyprus, must enact national legislation implementing the directive.
• 2027 (first reporting cycle) — Large employers (250+ employees) must submit their first gender pay gap report covering 2026 data.
• 2031 — The smallest mandatory reporting threshold (100–149 employees) comes into force.