EU Pay Transparency: Slow Complying and a New Test for Leadership

With less than a year until EU member states must transpose the Pay Transparency Directive, most employers are still catching up. A new survey by Trusaic shows that only 16% of organizations that operate in the area are ready to comply. 

HR Policy Global’s Take: As the EU Pay Transparency Directive takes effect next year, companies with employees or operations in Europe should start preparing now for new reporting, disclosure, and communication obligations. Our team is here to help members navigate the process and answer any questions.

The Trusaic report shows that only 16% of organizations feel ready to comply with the directive for base pay analysis, and the number drops to just 3% when factoring in total cash compensation. These figures highlight the scale of the challenge facing employers across the EU.

Key Obstacles slowing companies down:

1. High cost of pay adjustments: Roughly 64% of employers cite the expense to adjust pay as a major barrier to moving forward. 
   
   
2. Data inaccuracy: In many companies, pay data, job classifications, and HR systems are siloed. Difficult integration and mismatched systems make accurate reporting a challenge. 
   
   
3. Complexity of job classification: Determining which roles are “similar or equivalent” across business units or countries is challenging. 
   
   
4. Internal alignment and governance challenges: HR, legal, compensation, and business leaders often have differing priorities or levels of maturity in handling equity. 
   
   
5. Fear of internal dissatisfaction or backlash: Revealing pay ranges and gaps can trigger discontent among employees who see disparities or feel overlooked. Companies fear the reputational and morale implications. 
   
   
6. Slow start and procrastination: Many organizations have not yet even begun preparing. A significant proportion — 41% in one survey — say they haven’t initiated readiness work.

Fair Pay Leaders See Compliance as the Baseline, Not the Finish Line.

Acknowledging all the challenges, Wen Dong, Senior Director at HR Policy Global, shared insights on what distinguishes companies that are leading on fair pay, at Mercer’s Europe Rewards Conference last week.

“The EU Directive has set a new global benchmark,” Wen noted. “It gives employees an enforceable right to understand how their pay compares to others doing similar work. But the real challenge isn’t the data—it’s how organizations prepare to talk about fairness with their employees, works councils, and social partners.”

The joint pay assessment requirement—triggered when gender pay gaps exceed 5% unjustified pay gap—means companies must sit down with worker representatives to review pay data and develop action plans. These discussions can be sensitive, requiring careful preparation, consistent job classification, and strong communication skills.

“Even if you don’t have a formal works council in certain countries, now is the time to start building that dialogue,” Wen said. “Understanding who will be at the table and helping both managers and representatives interpret the numbers will make all the difference.”

Pay transparency is ultimately a test of corporate character. It reflects who companies hire, promote, and develop—not just what they pay. A fair pay leader company will invest in manager capability, align internal systems with fairness goals, and treat transparency as part of organizational maturity.