Hungary may miss deadline for transposing EU’s Pay Transparency Directive – What should Hungarian employers expect?
Despite decades of legislation and policy efforts, a persistent gender pay gap continues to affect employees across the EU. Recognising that existing enforcement mechanisms have proven insufficient, on 10 May 2023 the European Parliament and the Council of the European Union adopted Directive (EU) 2023/970 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms. This landmark legislation shifts the burden from individual employees seeking redress to employers, who must now proactively demonstrate transparent and fair pay practices.
EU member states must transpose the provisions of the Directive into their national law by 7 June 2026. Hungary had begun working on the transposition of the Directive, but the proposed national regulation is not available and it remains unclear whether the 7 June 2026 transposition deadline will be met.
The following article outlines the impact of the Directive and recommends steps for employers regarding data and reporting requests if Hungary fails to transpose the Directive by the deadline.
Direct applicability of the Directive to employers
EU directives cannot be directly applied to legal relationships between employers and employees in the private sector. As a general rule, an employee cannot directly invoke an EU directive that has not yet been transposed, even if the deadline for transposition specified in the directive has expired. In the absence of its transposition into Hungarian law, the directive cannot impose any obligations.
This does not mean that individual directives are completely irrelevant in a potential legal dispute. Hungarian courts are required to apply the relevant Hungarian rules – specifically, the provisions on equal pay in Act I of 2012 on the Labour Code (Sections 12 and 136 of the Labour Code) and the rules of Act CXXV of 2003 on Equal Treatment and the Promotion of Equal Opportunities – in accordance with EU directives.
In proceedings concerning labour matters or equal treatment, the court may apply the currently effective Hungarian legislation that takes into account the principles of the Pay Transparency Directive, even in a way more favourable to the employee. In summary, although the Directive cannot be directly invoked as a basis for a claim, it may substantially influence the outcome of legal disputes.
Any liability arising from the failure to transpose the Directive rests with the Hungarian state and does not impose a direct obligation on the employer. The risk for employers is that the interpretation of existing Hungarian rules may become stricter in the future, even without transposing the Directive.
Handling employee data requests and reporting requests
If on 7 June 2026 an employee contacts the employer to request information about their individual pay level and the average pay levels for categories of employees performing the same work as them or work of equal value to theirs, broken down by sex, Article 7 of the Directive states the employer should provide the requested information to the employee within two months (i.e. 7 August 2026).
But what steps should be taken if national transposition legislation is not in place?
In the absence of transposing legislation in Hungary, the employer has no legal obligation to comply with the data request and analysis requirements in the Directive. In this case, employee requests must be assessed based on currently applicable Hungarian rules (i.e. primarily Section 12 of the Labour Code regarding equal pay, the equal treatment requirement set forth in the Equal Treatment Act, and the data access rules of the General Data Protection Regulation) and must be fulfilled only as required by these provisions.
Practical and risk management considerations, however, suggest that employers should prepare now for the application of the Directive’s rules with a preliminary review of wage and classification structures, and information processes. In a labour dispute, the court may interpret current Hungarian regulations according to the Directive’s purpose, which could lead to obligations similar to the Directive. Also, the transposing legislation is expected to enter into force with little preparation time.
Furthermore, employers that reject requests for information could face reputational and labour-relations risks, especially if employee representatives cite the Directive.
During the period leading up to the transposition of the Directive into Hungarian law, employers should assess incoming employee inquiries on a case-by-case basis in accordance with current Hungarian law, and prepare an information template in accordance with Article 7 of the Directive so that it can be applied immediately upon entry into force of the domestic regulation.
The article co-authored by Bence Kovacs.
For more information on the Directive, contact your CMS client partner or the CMS experts who contributed to this article.
