How prepared are businesses for the EU Pay Transparency Directive?
The EU Directive on pay transparency was first published back in March of 2021. It set out a sweeping range of regulatory requirements for all companies operating in any of the EU’s 27 member states.
From mandatory salary ranges in job postings to gender pay gap reporting, the Directive represents a real tide change for businesses, HR departments and employees alike.
Fast forward three years, and you’d expect that businesses are deep into preparations for this upcoming seismic shift. However, a new report from The Conference Board, based on a survey of 78 of Europe’s largest employers, suggests that this is far from being the case.
The survey found that 41% of respondents – whose companies collectively employ approximately three million people across the globe – said that they have yet to begin preparing for the EU Pay Directive at all.
Even more alarming? The same survey revealed that less than 2% of businesses believe that they are already compliant with the Directives sweeping requirements.
Why smart companies will make proactive changes now
When it comes to pay transparency and high-quality compliance, a last-minute quick fix simply won’t work. To ensure a smooth transition in 2026, companies need to organically embed pay transparency into their company culture, HR processes and internal communications.
Afterall, the directive doesn’t just call for transparency about what employees are paid - it also aims to address and reduce pay inequalities, particularly gender pay gaps.
By being proactive, early preparation gives companies the opportunity to conduct their own thorough pay audits to identify any existing gaps and take corrective actions - before they’re legally mandated to do so by the Directive.
Addressing disparities now is not only a vital step toward compliance, but it also mitigates the risk of internal - and potentially legal - disputes further down the line.
Ultimately, the Directive empowers employees to question existing pay structures. From 2026, staff will have the right to request information from their employer about their pay level, broken down by sex. They’ll also have access to pay information thanks to the fact that their employers will be mandated to post pay range information in job listings.
As well as having an objectively justifiable compensation structure in place, managers will need to be prepared to clearly explain salary structures and pay choices. Because if employees don’t like what pay transparency reveals? Cue an onslaught of workplace tension, retainment problems and potential legal battles.
The EU Pay Transparency Directive is part of a broader global trend toward greater transparency and equality when it comes to compensation. Similar regulations are being considered or implemented in countries beyond the EU, including the UK and US.
By proactively preparing for the Directive, companies can set themselves up for success on a global scale. Those that have offices dotted across the globe will benefit from proactively aligning their policies and processes, reducing future administrative burden and embedding consistency across their global operations.
The bottom line is, pay transparency isn’t going anywhere. So, the employers that will really thrive when the Directive comes into full force? The ones that embrace the opportunity for positive change now, making long-term plans to weave transparency into their company culture, HR processes, and communications.
Getting prepared for pay transparency with gradar
By building an accessible, affordable and end-to-end job evaluation system packed with progressive features, gradar is here to help businesses across the EU (and beyond!) comply with the requirements of the EU Pay Transparency Directive.
One of the most crucial requirements of the Directive is mandatory objective job evaluation. Considering a wide range of factors such as professional knowledge, specific responsibilities and interpersonal skills, gradar offers a deeply analytical and highly objective approach to job evaluation.
By having this watertight system in place, companies are prepared to confidently justify their pay practices to employees if they exercise their right to information. And if pay disputes do arise? Gradar's point-based analytical approach stands up in court as defence against a pay discrimination claim.
Equally, gradar’s pay gap analysis feature helps companies make sure they’re getting pay equity right. By analysing the distribution of salaries within a grade among male and female employees, our software spots discrimination before it becomes a real issue.
Finally, gradar helps companies create salary bands and pay ranges. This gets companies fully prepared to post prospective salaries on job listings, making sure the figures are appropriate, competitive and - above all - equitable across the board.