EU Pay Transparency – How Should Organisations Be Preparing?
- Paul Hunter
- Jul 21
- 2 min read
Updated: Jul 28
From June 2027 onwards, businesses will need to report on their gender pay gap (for 2026 when the directive becomes law), both across the company as a whole and within categories of workers who do the same work or ‘work of equal value’.
For some EU countries this will see the introduction of mandated gender pay reporting for the first time, whilst for a number of others it extends the current requirement quite significantly.
We have prepared some practical guidelines and a key activity checklist (Exhibit 1) around 4 areas that organisations should currently be looking at to ensure readiness for the New EU Directive and reporting requirements:
Collate and conduct a thorough analysis of all existing pay data in the organisation to begin to identify any potential pay gaps, across both fixed and variable pay.
In many organisations the initial obstacles might simply be around data quality, accuracy and availability
Begin the categorisation of what roles count as ‘work of equal value’, establishing clear definitions for ‘categories of worker’ – here the key element will be the identification of job families based on similar skills supported by a solid job architecture and pay banding system.
Organisations that do not have a well developed grade and pay banding system, underpinned by a reputable job evaluation methodology, will struggle to explain the inevitable pay differences that will emerge in terms of ‘objective gender neutral criteria’, as required by the directive
Review the organisation’s recruitment processes to ensure compliance – pay ranges for advertised roles will have to be given to candidates and at the same time organisations will no longer be able to request or use a candidate’s current level of pay as a benchmark.
Accurate job sizing and benchmarking prior to going to market will be essential ingredients for success
Begin to direct the organisation’s culture into being more transparent about pay, enhancing communication and employee engagement.
Elements of the organisation’s people and pay policies will need to be revised and updated to support greater pay transparency. Education on pay principles is another key ingredient
Exhibit 1. EU Pay Transparency - Readiness Checklist
Paul Hunter, Principal Consultant at People. Performance. Reward.