Draft law to transpose the EU Pay Transparency Directive in Cyprus

The Department of Labor Relations has released a draft law to transpose the EU Pay Transparency Directive (2023/970) for public consultation. The draft closely follows the text of the directive and would introduce new employer requirements and pay reporting obligations. Cyprus had an unadjusted gender pay gap of 12.2% as of 2023, just above the EU average of 12.0% (Eurostat data).

New requirements would include:

• Pay transparency during recruitment: Employers would need to provide information about the initial pay in the job postings or before interview. Employers would be prohibited from inquiring about current salary or salary history
• Transparency on pay setting: Employers with 50 or more employees would be required to make available information on the criteria used to determine pay and benefit levels and pay progression (which must be objective and gender-neutral)
• Employee right to request: Employees would have the right to information on their pay level relative to average pay levels for workers performing the same work or work of equal value, broken down by gender
• Pay gap reporting: Organizations with 100 or more employees would be required to report periodically on gender-based pay gaps by entity and category of worker; every three years for employers with 100 to 249 workers, and annually for larger employers. Entity-level gaps are to be reported to the local regulator; category of worker gaps are to be reported internally and to employee representatives. In the event of pay gaps of 5% or more by worker category that employers cannot justify or correct within six months, the employer would need to carry out a joint pay assessment in cooperation with employee representatives and develop an action plan to close the gap
• Pay structures: Employers would be required to have formal pay structures, as well as to determine worker categories using gender-neutral job factors (such as responsibility, skills, effort and working conditions). Pay structures and pay increases would need to be aligned to these criteria and categories
• Pay definition: The definition of pay specifically excludes termination-related payments and employee pension contributions
• Employee representatives: Where there are no employee representatives in place for the purposes of the directive, employees should be able to be represented by a representative of their choice

The deadline for transposing the directive into local law is June 1, 2026, with employers needing to comply with all of the directive's requirements from June 2026, except for pay gap reporting which will commence in June 2027 for employers with 150 or more employees and in June 2031 for employers with 100 to 149 employees. Employers should monitor the progress of the draft legislation and prepare for its likely implementation, including the development of any databases and reporting systems to support compliance.

Contacts

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Tamsin Sridhara

Global Pay Equity Lead

email Email

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Michael Zeler

Head of Work & Rewards, Central & Eastern Europe

email Email phone +30 210 9473751

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