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

With less than a year until EU member states must transpose the Pay Transparency Directive to national laws, most employers are still catching up with the gender pay gap analysis requirements.

Not ready for compliance: A new survey by Trusaic shows that only 16% of organizations that operate in the area feel ready to comply with the directive for base pay analysis, while just 3% are ready when factoring in total cash compensation. These figures highlight the scale of the challenges facing employers across the EU.

Key Obstacles slowing companies down include:

• High cost of pay adjustments. Roughly 64% of employers cite the expenses associated with adjusting pay as a major barrier to moving forward.

• Data inaccuracy. In many companies, pay data, job classifications, and HR systems are isolated. Difficult integration and mismatched systems make accurate reporting a challenge.

• Complexity of job classification. Determining which roles are “similar or equivalent” across business units or countries can be difficult.

• Internal alignment and governance challenges. HR, legal, compensation, and business leaders often have differing priorities or levels of maturity in handling equity.

• Fear of internal dissatisfaction or backlash. Revealing pay ranges and gaps can trigger discontent among employees who see disparities or feel overlooked, which can create negative implications for morale, culture, and company reputation.

• 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.

Considerations for employers: Wen Dong, Senior Director, 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 leading company will invest in manager capability, align internal systems with fairness goals, and treat transparency as part of organizational maturity.