Pay Transparency 2026: Is This the End of Pay Secrecy in Hungary?

In light of the upcoming changes, you are now reading an expanded version of one of our earlier articles on this topic.

Before we jump to 2026, here’s a landmark date in labour law history: 1968. The place: Dagenham, England, where female workers at the Ford plant went on strike for equal pay. The story became a film, and the film became a symbol: an emblem of the principle of equal pay for equal work. Almost sixty years have passed since then. And yet, in today’s Hungary, women still earn 17.8 percent less than their male colleagues. It is into this situation that, from 2026, the European Union directive will arrive, fundamentally reshaping how we think about pay.

The objective of the EU directive is simple: to reduce the gender pay gap and make pay systems more transparent. But this is more than just another compliance exercise. It could trigger a complete shift in mindset in HR, finance and leadership. The EU directive will require companies to rethink their pay structures from the ground up, and for many organisations this will likely be a lengthy process.

Pay transparency 2026 – what changes can companies expect?

The upcoming EU regulation will introduce changes that directly affect the relationship between employer and employee.

Salary ranges will have to be disclosed already in the job advertisement or, at the latest, before the interview. The phrase “competitive salary” on its own will no longer be sufficient (European Commission, 2023). Pay secrecy clauses will be removed from employment contracts. Employees will be free to talk about their remuneration, which represents a fundamental shift in terms of transparency. Anyone will be able to request written information on their own pay level and on the average earnings of men and women in comparable positions.

Under the EU directive, companies with more than 150 employees must submit their first report on pay data by June 2027. The difference lies in the frequency: companies with more than 250 employees will have to report annually, while those with 150 to 249 employees will report every three years. Employers with between 100 and 149 staff are granted some leeway: for them, mandatory data reporting will only apply from 2031 onwards. Here comes the twist: if a pay gap of more than five percent is found among employees performing work of equal value, the company will be required to carry out a joint pay assessment together with employee representatives.

Where is pay tension likely to erupt within the organisation?

Where unequal pay has quietly coexisted for years, pay transparency is likely to generate serious tensions. It will come to light that a newly hired specialist earns more than a colleague who has been with the company for a long time. Hidden gender-based pay differences will be exposed. Past, informal pay-setting practiceswill be called into question – the “deals” struck years ago.

This is not a theoretical issue. A 2023 study by Syndio analysed data from 786,000 employees across 48 organisations and found, that in highly paid positions particularly in HR, finance, marketing and IT – in 83 percent of cases newly hired employees earn at least as much as, or more than, their long-serving colleagues. What is more, in 30 percent of cases, loyalty effectively amounts to a “penalty”: those who have been with the company for a long time earn distinctly less than new hires in similar roles.

Pay tensions are especially strong in organisations where job roles have never been evaluated using a formal system.

These situations require conscious communication, corrective measures and well- prepared leaders. Introducing a transparent pay structure is not only a legal issue, but also a deep cultural and organisational one. Leaders will have to provide detailed explanations for pay differences and be able to justify why a given role falls into one pay band rather than another.

What leaders need to do: how should companies prepare?

Transparency requires companies to put their internal pay structures in order before the regulation comes into force. Five fundamental steps lie ahead:

Internal pay audit: take stock of where you stand. What is the current state of pay, and what discrepancies and risks can be identified within the organisation? This reveals in which roles, departments or organisational units pay differs unjustifiably. During the audit, it is worth examining how pay levels align with market benchmarks, whether access to pay rise opportunities is equal, and how the performance evaluation system links to remuneration.

Job evaluation system: a formal, objective and gender-neutral set of requirements with clear criteria. A well-functioning system takes several factors into account: the responsibilities associated with the role, the required qualifications and experience, the scope of decision-making authority, as well as the strategic importance of the position. It is crucial that these criteria are based on measurable indicators rather than subjective judgement.

Market benchmarks: competitive yet sustainable pay bands aligned with industry standards and the company’s financial capacity. When defining pay bands, companies must take into account regional specificities, company size, industry and stage of growth.

Communication strategy: a considered plan for explaining the changes and managing the tensions that will arise. Transparency and communication cannot be a one-off campaign – an ongoing dialogue with employees must be maintained.

Leadership training: preparing leaders for difficult conversations about pay. In training sessions, leaders can learn how to handle conflict situations, how to communicate the reasons for pay differences and how to design development paths for employees who are dissatisfied with their pay.

International experience – what do the data show?

Pay transparency 2026 is not entirely new in Europe. Several countries have already introduced their own regulations, with instructive results.

In Denmark, after regulations were introduced in 2006, the pay gap fell by 7–13 percent, not because women’s wages rose substantially, but because men’s wage growth slowed. Employers applied pay compression to avoid internal tensions.

In the United Kingdom, the “name and shame” model introduced in 2017 exerts reputational pressure, but in the absence of financial sanctions, the median pay gap stagnated between 2018 and 2022.

Iceland has built the world’s strictest system: above 25 employees, the Equal Pay Certification is mandatory, based on a gender-neutral job evaluation system. Iceland tops global gender equality rankings, yet a roughly 10 percent pay gap persists ue to segregation between sectors..

France’s 2019 Equality Index combines measurement with sanctions: three consecutive years of poor performance can result in a fine of up to one percent of the wage bill. This has proven to be a highly effective incentive.

The U.S. example is also interesting: mandatory disclosure of pay ranges in job advertisements helps rebalance bargaining power during salary negotiations. Where job ads are transparent, pay transparency has demonstrably been more effective in reducing the gender pay gap and has also increased the number of applicants.

The lesson is clear: pay transparency only truly works when mandatory disclosure, objective evaluation systems and financial sanctions are combined.

The role of the interim professional: objectivity and speed

Introducing pay transparency is a complex transformation: legal, HR, financial and change management issues all intersect in the process.

An experienced interim manager can quickly and objectively conduct a gap analysis, identifying the weak points of the current situation. They help design new pay structures and processes that comply with the requirements of the European Union directive. They support internal communication and change management, which are critical to a successful transition. They train and coach leaders in their roles adapted to the new context, ensuring they handle sensitive conversations around pay in a professional manner.

Beyond being an EU directive that must be transposed, pay transparency is also an opportunity: it can form the basis of a fairer, more open and, in the long term, more competitive corporate culture.

With more than 20 years of experience and 850+ successful projects, Interim Kft. helps companies tackle complex change management challenges such as the implementation of Pay Transparency 2026. Our experts do more than just advise: from creating access to the necessary resources all the way to full implementation, they accompany you throughout the process, ensuring a smooth transition and sustainable results.