EU Pay Transparency Directive: What it means for your company and 6 actionable steps
We recently hosted a webinar with our partners at Pihr about the EU’s new Pay Transparency Directive. In this webinar, we covered the key points every employer needs to know, from making job seeker salaries transparent to reporting on gender pay gaps. This blog post builds on that discussion, offering a clear guide for businesses to understand and comply with the directive. Here, you’ll find essential information and practical steps for your company.
What is the EU Pay Transparency Directive?
The EU Pay Transparency Directive represents a new effort by the European Union to address the persistent issue of gender pay inequality. At its core, the directive mandates increased transparency in pay structures and processes, requiring organizations to be more open about how they remunerate their employees. The goal is to make it easier to identify and rectify instances of pay discrimination, particularly those based on gender.
Member states are expected to transpose this directive into their national laws within the next three years. As these changes unfold, there are proactive steps that organizations can begin taking now to address these issues and stay ahead of the curve.
Actionable steps for employers:
1️. Transparency for job seekers
Let's start by updating our job adverts with clear pay ranges and refrain from asking about salary history. It's about opening the first chapter of employment with transparency.
2. Right to information for employees
We must empower our employees with the right to their individual pay information. Keeping salary records accurate in your HR- or salary system can simplify this process.
3. Gender pay gap reporting
Organizations with more than 100 employees will need to publish gender pay gap information by 2026.
4️. Joint pay assessment
If a gender pay gap of 5% or more is found, a joint pay assessment will be necessary. It's time to understand our pay grades and rectify unjustified discrepancies.
5️. Compensation and burden of proof
With the burden of proof on us, documenting and rectifying unjustified pay differences is more important than ever to avoid sanctions.
6️. Collective claims risk
We should be prepared to face collective claims on equal pay. Transparency isn't just compliance, it's a commitment to fairness.
Summary
Start preparing for the EU Pay Transparency Directive now. Update your systems for better transparency, review your salary structure to address any disparities, communicate these changes effectively with your team, and secure the backing of senior management. These steps will not only ensure compliance but also demonstrate your commitment to a fair and equitable workplace.
