Pay transparency

What it means

Pay transparency refers to the rules introduced by the EU Pay Transparency Directive. Its aim is to enforce the principle of equal pay for men and women for equal work or work of equal value by making pay information no longer a secret.

The directive brings several obligations. Employers must tell applicants the starting pay or pay range before the interview, for example in the job ad, and may not ask about previous salary. Employees have the right to information on pay criteria and on average pay for the same work, broken down by gender.

Larger employers, by headcount, will regularly report their gender pay gap. If the gap in any category exceeds a set threshold and cannot be explained by objective criteria, they must carry out a joint pay assessment with employee representatives and take corrective action. These rules build on the principle of equal treatment.

How it works in practice

We advise clients to start by mapping job positions and grouping them by equal value of work. Criteria such as skills, effort, responsibility and working conditions should be objective, gender-neutral and written down, for example in an internal pay policy.

We then analyse pay data: base pay and variable pay, supplements and benefits, since the directive defines pay broadly. Where gaps appear, we look for explanations such as experience or performance, and where none exists, we propose gradual correction.

For job ads, we help set a pay range that is realistic and fits the internal structure. Current employees in similar roles will see the published range too, and inconsistencies can prompt questions or claims.

What to watch out for

In equal pay disputes, the burden of proof shifts to the employer. If an employee shows grounds to suspect unequal pay, the employer must prove the difference has an objective reason. Without documented criteria that is very hard to do.

Providing pay information must respect data protection under the GDPR. The employer discloses averages by category, not individual salaries. In small groups where an individual could be identified, particular care is needed.