Pay transparency: from directive to policy

In May 2023, the European directive on pay transparency was adopted. But just how transparent are we by now, what can still be improved and how can we jointly work towards a fair pay policy?

Pay transparency as a European directive

The new rules on pay transparency as set out in the European Directive need to be transposed into national law by 7 June 2026 at the latest. This European directive requires companies in the European Union to disclose their payroll information.

The purpose? To combat wage discrimination and to close the gender pay gap. The directive also sets out provisions on compensation for victims of wage discrimination and penalties, including fines, for employers who break the rules.

Open communication on remuneration on the rise on the shop floor

The road to the uniform implementation of the directive starts on the shop floor. Our latest research figures show that a quarter of employers transparently communicates on the pay packages of all positions within the organisation. Seven out of ten employers think it is a good idea to openly share information about salaries.

Pay is also a hot topic among colleagues: six in 10 employees know how much their colleagues earn.

Benefits of transparency in salaries and wage increases

The new directive requires (large) companies to report on exactly how transparent they are about the criteria that determine salaries and wage increases. Obviously this requires employees to be duly informed about this. So it pays to talk about pay. Not just because it is being imposed by a higher authority, but also to strengthen the relationship between the company and its employees. An added strong suit in a tight labour market.

This not only ensures pay transparency within the company but also in the industry or between similar companies.  A company that already pays competitive salaries will now find it easier to compete with companies that do pay apply market-compliant wages.

Employers are often unaware of possible wage discrimination. Unintentionally, a bias appears to exist within the company.  With the new directive, increased pay transparency raises awareness among employers and helps them detect and rectify such discriminations more quickly.

No pay transparency without a pay policy

If you mean to be transparent about remuneration, you need to have a clear pay policy in place, which your employees should know about. Make sure people know what they need to do to earn their salary or qualify to get a pay rise. As a company, how do you embark on this exercise?

• Ensure correct remuneration: fair and market-compliant;
• Give your employees security and prospects when it comes to pay;
• Chart experience, performance and achievements;

With a well-thought-out pay policy, you improve your employees’ commitment and satisfaction. Which is a win-win situation as that is how you keep your talented workers on board.