The EU is using greater pay transparency and enforcement rights to ensure employers are delivering equal pay. It is part of a five-year focus within the EU on equality in the workplace.
In short, the Pay Transparency Directive gives employees extensive new rights to information about their own pay and the pay of male and female peers. You can read more about the Directive and the practical implications in our article: EU Pay Transparency Directive.
Employers will need to be confident that their pay and benefits are ready for greater transparency; the challenge for many organisations will be the cultural shift on how they talk about pay. Organisations need to be preparing to:
First, it is essential that organisations have a strong pay equity narrative. It sets the foundations for how you will review, design, and assess career and reward policies and programmes going forward.
Organisations leading the way on pay equity already have a strong narrative in place, internally and externally. This expresses what pay commitments will be made at a company level, like providing consistent and fair compensation based only on the legitimate drivers of pay.
A strong narrative will align with your values and purpose as an employer and fit into your overall people strategy. It’s the right thing to do as a responsible employer and can be a big part of your total reward philosophy to drive pay for performance.
It can also form a key pillar of your Diversity, Equity and Inclusion (DEI) strategy. There is enough research to show the connection between diverse teams and strong financial performance. Use this change to emphasise the value of an inclusive workplace that aims to hire and retain diverse talent.
Reinforce the narrative in all conversations about pay with both prospective and current employees. This can be through total reward statements, announcements on incentive plans, performance/pay reviews, and careers websites.
You need to carefully consider several different audiences and stakeholders as part of the journey towards greater pay transparency. Robust and objective HR policies and processes only support pay equity if they are adopted by those involved in hiring, pay review and promotion cases.
Plan to engage with the following stakeholders in the short term:
By 2027, you will need to be able to explain any differences in pay with the help of legitimate drivers like location, experience, and skills. But before that, you can help employees understand the pay processes in place and how pay is decided currently as well as explain how work is defined through your job architecture. Building trust on pay management processes will go a long way to help you effectively communicate the reasons for any justifiable differences in the future.
As the Pay Transparency Directive comes into effect, you will need to carefully plan the experience for the following audiences:
Ahead of the Pay Transparency Directive taking effect, it is also critical that leaders can talk about their organisation’s pathway to greater transparency, and that managers understand the organisation’s pay processes and can talk confidently about them.
Finally, organisations need to consider their approach to disclosing what is available under the new rights to information. We believe that, rather than being inundated with questions and requests from employees and their representatives, organisations should opt for a route where information is proactively shared with employees.
In order to deliver this information, organisations need to provide a solution which is:
Embark, our employee experience platform, helps deliver on all of these requirements and more.
As organisations approach their communications plans for the future it will be important to start the work now, rather than wait. Talk to us about how you can prepare your communications ahead of the EU Pay Transparency Directive.
