Managing pay through winds of change
HR and compensation professionals are navigating what seems to be a whole new atmosphere of pay equity and transparency. Depending on where your workforce sits in the world, your organization may feel more like it’s in a whirlwind rather than a light breeze. But, when you think about it, are weather reports ever predictable?
Let’s look at what we see unfolding in Canada, the UK and Europe: a focus on jobs of comparable worth. In these markets, the regulatory focus on equal pay for equal work is an effort to correct pay for male-dominated jobs that is higher than female-dominated jobs when they all require the same level of skills, effort, responsibility, conditions and so on.
The UK’s Next and Asda court cases are significant as they are the largest private-sector equal pay claims in the UK and across Europe (Next’s case covers 3,500 female salespeople; Asda’s case covers 60,000 female floor staff). While Asda’s case is still pending, Next is the first equal pay claim against a major retailer to reach a decision.
The UK Employment Tribunal decided in favor of Next’s female salespeople who called out the higher hourly pay of male warehouse staff (ranging from £0.40 to £3 per-hour difference, or a £30 million legal claim). The Tribunal decided that:
Why is this important for other markets? Well, for example, the U.S. is very litigious. As of this writing, there are pay discrimination cases making headlines in California (Apple) and Washington (Amazon). Meanwhile, Mastercard recently settled a $26 million case.
While the U.S. historically has been the exception compared to the rest of the equal-pay world, could the UK lawsuits — which include those outstanding with retailers Tesco, Sainsbury’s, Morrisons and Coop — be a bellwether of change? What could this mean for the structure, design and pay management of employers in other markets? What are the implications for employers regarding how well they evaluate pay gaps?
In the U.S., equal pay for equal work has been a fixture for more than 60 years. However, recent Executive Orders (13985, 14173) are causing federal agencies and private companies to re-examine their talent and pay programs and practices for unintended biases.
What remains, though, is the importance of having the talent and rewards strategies, structures and practices in place to ensure fair and objective career and pay decisions that don’t favor one group over another. Both court cases and the Executive Orders are shining a spotlight on the importance of being prepared for any shift in the jet stream.
Job architecture and job leveling frameworks are essential and called out by the EEOC and EU Pay Transparency Directive as a requirement to support the identification of roles that are doing work of equal value on a robust basis. Yes, these enable pay and career equity, but they no longer are merely a best practice; they are a baseline standard.
These atmospheric changes may mean that you need to take stock of your compensation philosophy and how it is being applied across your business, job and / or employee segments.
Know where your organization stands by assessing how well pay structures support internal pay equity as well as external competitiveness. If comparable worth is a consideration in your market, ensure that external market values are not the only determining value for setting pay between jobs of comparable worth.
Finally, maintain clear policies and guidance to inform pay decisions at hire, at promotion and during the annual review / performance cycle.
Confirm your pay equity methodologies and outline how your “global” pay equity analysis will look from different locations’ compliance requirements. Prepare dry-run calculations for disclosure purposes (e.g., government, employee representatives) so you understand the differences in the employee, job and pay data that need to be compiled as well as where you need to address gaps. When examining gaps, look at both group and individual gaps — a requirement of the EU Directive and recently called out by EEOC Acting Chair Andrea Lucas.
Delivering pay equity is core to employees’ trust in being paid fairly. Whether carried on the breeze or delivered in a whirlwind, our research shows that employees welcome greater insights into how they are paid. Communications providing employees with increased pay transparency need to be carefully managed to ensure that managers, employees and union representatives understand the additional information being given and that the response is largely positive. This is especially true for regulatory-driven transparency, when the information required may be very different from what the employee typically receives.
In 2021, Colorado was the first U.S. state to introduce pay range posting requirements. Four years later, the North America landscape looks different, with 14 U.S. states, four Canadian provinces and eight U.S. counties or cities having enacted pay range disclosure requirements. In 2026, we are excited to welcome 27 EU nations that are embarking on a greater change than we ever expected.
Regardless of your organization’s geographic footprint, establish your pay equity and transparency roadmap by defining your commitments and priorities as well as what you will communicate to all stakeholders. Then, identify key delivery steps, including enabling and supporting managers so they are confident in their pay decisions and employee discussions. A lot of work is required to be confident that your talent and rewards programs are delivering pay equity.
