EU: The Pay Transparency Directive

Pay Transparency Directive expands metrics and reporting. Ireland plans salary disclosure for job ads. New rules could increase workers' representatives and reshape pay data practices across Europe.

The Key Points: The Pay Transparency Directive expands metrics and reporting thresholds across Europe, and Ireland proposes salary disclosure in job adverts, outpacing the EU’s minimum standards. Categorization methodologies and data protection remain central topics.

Why This Matters: Companies will face new reporting demands, especially those with 100+ employees, with earlier and broader reporting obligations in some countries. Individual-level pay information and representative training are set to increase.

What Might Happen Next: National transposition will vary, with some countries implementing more rigorous standards sooner. New rights for workers’ representatives and clearer categorization processes may be established.

...Meanwhile, Australia has introduced some new, far-reaching equality legislation. You can get details of what is involved from this article by Adam Salter of Jones Day: here

ADDITIONAL INFORMATION:

Iain Stark is an independent consultant on compensation issues and write updates for us on developments around the Pay Transparency Directive. Here is his full article.  

Reporting: France like other countries such as Belgium, Ireland, Italy and Spain currently requires reporting if there are 50+ workers in an entity, below the Directive’s 100+. No surprise that the document for consultation issued in May retains 50+ for reporting albeit that it may be a “light touch” if 50-99 and the date when reporting will be required is also to be set. The Directive only requires first reports in 2031 if 100-149. It is 2027 if 150+.  The 7 required metrics in the Directive will be on top of the 4/5 today in France, 6 are aggregate, will come automatically from regular reporting and will be public, so the only real challenge is reporting by category which will not be public and where a “light touch” may come in.  

Pay in job postings: Ireland started with a proposal in January that the salary or salary range must be in job postings, which would include sites such as LinkedIn. This goes beyond the right in the Directive for a candidate to know this if they ask. The Directive requirement that an employer can’t ask about pay history is confirmed. The proposal stops short of requiring transparency on total pay. Salary will likely be the starting point in many other countries perhaps with a reference to bonus opportunities and benefits.  In part of Belgium, Wallonia/Brussels, this has already started for the public sector.  There are similarities to many US states/counties/cities on salary being in job postings, again salary not total pay. 

Categorisation will be the key - For reporting, for an individual’s right to information and for data protection: France is a good example where broad categories or even collective agreements may be too broad. The directive only requires that the method and criteria are clear, for example Hay, Mercer, WillisTowers, etc should be compliant. The grading/points result does not need to be disclosed, and most employers will translate this into their internal levels, e.g., executive, senior manager, experienced professional. So far, no draft has set a minimum comparison number for data protection. 

Workers' representatives: A focal point for categorisation methods and individual data and transposition. The Directive may result in new representatives where there are none today. Germany will start from a basis where workers’ representatives currently have to agree to the grading methodology and can already see individual pay data. The reporting thresholds are much lower than in Germany today. Training representatives on what can be technical compensation areas will be a focus including for any joint assessments if there is a reported unexplained 5%+ gap in the average pay of women versus men in a category that has not be corrected within 6 months.