What Requirements Does The EU Directive Set Out?
From mandatory gender pay gap reporting to empowering employees with a right to request information about their pay level, the EU Pay Directive is poised to shake up HR policies and processes across the bloc.
Ultimately, most companies' hiring process will need to change. From job postings to interviews, multiple aspects will be impacted by the Directive’s sweeping requirements.
Perhaps the most significant change? Posting the starting salary or pay range for advertised positions - either within the job posting itself or before the interview process begins - will become a legal requirement.
This aligns with a growing international trend to disclose expected salaries for job seekers. It’s already mandated in some US states, such as California and Colorado, with others set to follow suit soon.
The Directive also states that every part of the job advertisement and recruitment process should be gender-neutral. This means that all vacancies and job titles must be described with gender-neutral language.
And when it comes to the interview process, employers will be prohibited from inquiring about candidates’ current pay or pay history. This means that employers will no longer be able to use a candidate's current salary as a jumping-off point for salary negotiations.
Finally, some employers may have been using special terms in employment contracts to implement pay secrecy inside their organisation. Under the Directive, such clauses will be forbidden.
The good news? Candidates actually really want pay transparency. According to a survey by LinkedIn, a whopping 91% of the survey’s respondents said that including salary ranges in a job post would directly affect whether or not they hit apply.
Another one of their surveys showed that pay transparency in job postings gave job seekers a more positive overall impression of the company.
Knowing this, smart companies will be proactive about implementing change before the Directive comes into full force. By publishing salary ranges in job postings before 2026, organisations not only set themselves up for a smooth compliance transition, but can also give themselves a competitive edge.
With job seekers increasingly prioritising pay transparency and fairness, posting pay ranges in job postings now can attract great candidates - before all EU companies are required to do the same.
How Can Companies Comply?
Gauging a candidate’s pay expectations during the interview process? Under the Directive, this strategy will no longer fly.
Organisations that have relied on this tactic - as well as using a candidate's current pay as a starting point for salary decisions - will need to significantly overhaul their compensation strategy.
As pay transparency and equality take centre stage, it will be more important than ever that companies have a robust pay structure in place. To ensure consistent, fair pay across the board, it takes planning, analysis and a whole lot of data.
Equally, companies also need to ensure that the pay they’re offering is competitive. With candidates able to see how they could be compensated elsewhere, you risk alienating great candidates if you introduce a salary level that is too low.
To get it right, effective salary benchmarking is key. This involves systematically considering all aspects of remuneration to assess what staff in comparable companies are really receiving as take-home pay.
When it comes to establishing pay ranges, it’s vital that they’re generated using an objective framework that’s rooted in data. Because when everyone’s pay is out there in the open? There’s zero room for error or inconsistencies.
Preparing For Pay Transparency With gradar
Does all of this sound complex? It doesn’t need to be! At gradar, we’re on a mission to create an accessible, affordable and transparent pay transparency system for all businesses.
Not only can we calculate equitable, consistent pay ranges for job postings, but we also ensure that these numbers are competitive. How? By offering an automated translation of job evaluation results into survey-specific job codes.
Our job matching module is a web-based translation matrix that converts analytical job evaluation results into benchmark job matches from global and local salary surveys. You can feel confident that the salary ranges you post on your job listings are equitable, competitive and keeping speed with industry trends.
With deep insights and meaningful data all in one place, getting prepared for the EU Pay Directive couldn’t be simpler. If it sounds like gradar could help your business, get in touch with our team today!