The new European Directive should not be seen merely as a legal obligation. It is an opportunity for your company to review how it pays, promotes, recognises and develops talent, ensuring that these decisions are clear, consistent and sustainable.
With Directive (EU) 2023/970 and the publication, in August 2026, of the draft legislation transposing it into the Portuguese legal framework, companies now have greater visibility over the changes ahead and should prepare to demonstrate that pay differences are based on objective, neutral and sustainable criteria.
This does not mean that everyone has to earn the same. It means that your company must be able to explain why pay differences exist, how progression decisions are made and which criteria support salary increases, promotions and development opportunities.
Ultimately, this is the key question: can your company confidently explain how it makes decisions about pay, careers and talent development?
What is really at stake: clearer and more consistent talent decisions
In many companies, pay decisions have evolved over time based on relatively informal criteria, different practices across departments and varying interpretations of responsibilities, performance and career progression.
With greater transparency, these differences become more visible. And this is where the difficult questions begin: why do two apparently similar roles have different frameworks? What justifies a promotion? How can a salary increase be explained? Which criteria guide recognition?
That is why simply reviewing salary tables or preparing legal responses is not enough. Your company needs to clarify how it makes decisions regarding roles, competencies, performance, progression, compensation and people development.
Ultimately, the question is this: if someone challenges a decision about pay, career progression or recognition, will your company be able to explain it clearly and confidently?
Five critical dimensions to prepare your company
1. Pay and equity assessment
The first step is to understand your company’s current reality. Are there pay differences between people in comparable roles? Can those differences be justified? Is the data reliable?
A pay assessment helps identify risks, inconsistencies and priorities for action. It also helps turn fragmented information into concrete decisions.
2. Job architecture and contribution levels
Can your company explain why certain roles have different levels of responsibility, complexity or impact?
A well-defined job architecture helps structure that answer. It clarifies job families, levels, responsibilities and contribution criteria, creating a fairer and more consistent foundation for decisions about pay, careers and development.
3. Competency, performance and progression models
Does your company have clear criteria for assessing performance, competencies and potential? Do employees understand what is required to progress?
Competency, performance and progression models help reduce subjectivity, align expectations and strengthen the perception of internal fairness.
4. Compensation and recognition policies
Can your company explain how it makes decisions about salaries, increases, promotions and recognition? Or do these decisions still depend too heavily on each department, each manager or criteria that are not always clear?
Well-structured compensation policies help bring consistency to these decisions. They define criteria for salary bands, reviews, progression and recognition, making decisions easier to explain and strengthening the confidence of those affected by them.
5. Leadership and change management
be the ones responding to employees’ questions about pay, careers, progression and recognition.
Is your company preparing them for this role? Do leaders know which criteria they should explain, which messages they should communicate and how to manage potentially sensitive conversations?
Preparing leaders is essential to reduce different interpretations across departments, avoid internal confusion and strengthen trust in company decisions.
Why should you act now?
Preparing your company for pay transparency cannot be done overnight; it takes time. You need to analyse data, review roles, clarify criteria, align leaders and prepare communication.
With the publication of the draft legislation transposing the Directive into Portuguese law, companies now have greater visibility over some of the changes that may result from the new framework, although the legislative process has not yet been completed.
The earlier this work begins, the more room there will be to correct inconsistencies, anticipate risks and avoid rushed decisions.
More than responding to a legal requirement, this is an opportunity to strengthen trust in your company’s decisions and build clearer, fairer talent models that are better aligned with the business.
A quick checklist for your company
- Can your company justify pay differences based on objective criteria?
- Are roles, responsibilities and contribution levels clearly defined?
- Are there clear criteria for progression, promotion and salary development?
- Do performance and competency models support recognition decisions?
- Are leaders prepared to discuss pay, careers and development?
- Is reliable data available to monitor risks and support future decisions?
If any of these questions raise doubts, this is the right time to begin a structured preparation process.
How Bright Concept can help
At Bright Concept, we help your company prepare for pay transparency in a practical and structured way, connecting the legal requirements with what truly supports good people decisions: clear roles, consistent criteria, career models, compensation policies and prepared leaders.
We support your company in areas such as:
- organisational and pay assessments;
- job architecture, job families and level design;
- competency, performance, career and progression models;
- compensation, recognition and talent governance policies;
- leadership development and change management.
Pay transparency will make decisions about compensation, careers and recognition more visible. What matters is ensuring that your company has clear criteria, reliable data and leaders who are prepared to explain those decisions with confidence.
Would you like to understand where your company stands today and what it should prioritise?
Note: This content is for informational purposes only. It takes into account Directive (EU) 2023/970 and the draft legislation for its transposition into the Portuguese legal framework, published in August 2026. The legislative process has not yet been completed and the applicable framework may therefore still change.
FAQs
What is the current status of Pay Transparency in Portugal?
Directive (EU) 2023/970 should have been transposed into national legislation by 7 June 2026. In August 2026, a draft for the partial transposition of the Directive was published in Portugal, with the legislative process still ongoing.
Until the final framework is approved, the requirements set out in the draft should not be regarded as legal obligations already in force.
What changes with the Pay Transparency Directive?
The Directive strengthens the principle of equal pay for equal work or work of equal value, promoting greater transparency in pay criteria, recruitment processes, career progression and the analysis of pay differences.
Will companies be required to disclose salaries in job advertisements?
The Directive provides that candidates should have access to information about the initial pay level or salary range associated with the position at a stage that allows for informed negotiation.
The Portuguese draft legislation gives effect to this obligation, but the national framework is still going through the legislative process.
Can employees request information about salaries?
Yes. The Directive provides that workers may request information about the criteria used to determine their pay and progression, as well as average pay levels for workers performing equal work or work of equal value.
How these rights will be implemented in Portugal will depend on the final national legal framework.
Does Pay Transparency mean that everyone will have to receive the same salary?
No. Pay differences may exist, provided that they are justified by objective, neutral and consistent criteria, such as experience, competencies, responsibility, performance, qualifications or the complexity of the role.
What should companies do to prepare for Pay Transparency?
Organisations should assess their current pay structures, review job descriptions, clarify pay and progression criteria, identify potential inequalities, prepare leaders and communicate in a more transparent and consistent way.
Sources
- Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023.
- Draft legislation for the partial transposition of Directive (EU) 2023/970 into the Portuguese legal framework, published for public consultation in August 2026.
