LABOR & EMPLOYMENT ALERT: The New Paradigm of Pay Transparency
2026-03-20
The New Rules of Pay Transparency: Is your company prepared for the legal obligations coming into force this June?
The approaching deadline for the transposition of the new European Pay Transparency Directive (June of this year - 2026) marks the beginning of an unprecedented shift in Employment Law in Portugal. The traditional "taboo" surrounding remuneration is coming to an end, and companies that fail to adapt their Human Resources policies face heavy administrative fines, litigation, and reputational damage.
Below, we detail the main changes and the timeline that will directly impact companies and employees starting at the end of this semester:
1. Transparency in Recruitment (The End of Salary History) Recruitment rules will change drastically. Employers will be required to inform applicants about the initial pay level or the respective salary range prior to the job interview (for instance, in the job advertisement itself). Furthermore, it becomes strictly prohibited to ask applicants about their current or prior pay history.
2. The Right to Information for Employees Pay secrecy in employment contracts will become null and void. Any employee will now have the right to request (and receive) written information on their individual pay level and the average pay levels of workers performing the same work or work of equal value, broken down by gender. Confidentiality clauses that prevent workers from disclosing their own salary will no longer be legally valid.
3. Shift of the Burden of Proof In the event of employment litigation regarding pay discrimination, the legal logic is reversed. It will no longer be the employee who has to prove they were discriminated against; rather, the burden of proof shifts to the employer, who must prove that the pay difference is based on objective and gender-neutral criteria (such as merit, seniority, or qualifications). To do this successfully, organizations need to have their structures and pay scales properly audited and documented before the law comes into force.
4. Timeline and Urgency: The Clock is Ticking Although Directive (EU) 2023/970 was previously approved by European institutions, the strict and final deadline for its transposition and application into Portuguese law ends this June (2026). This means the preparation window has effectively closed. Job mapping, correcting unjustified pay disparities, and adapting recruitment processes must be ensured immediately, otherwise companies will be exposed to severe fines and claims starting in the second half of the year.
Does your company need to review its HR policies? Adapting to this new reality does not happen overnight. It requires reviewing existing employment contracts, updating job postings, and establishing transparent remuneration systems based on the objective value of work.
The Employment Law team at Global Lawyers is actively monitoring the implementation of these rules. Contact us for a preventive audit of your organization's HR policies.
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