Additionally, companies will need to inform employees annually of their rights to request details about their own pay level and the average pay across genders for people doing the same or similar work.
This will ensure that all employees have access to information that can expose potential pay inequalities within the organization.
Perhaps more importantly, employers will be required to provide transparency on broader pay structures. Companies will have to disclose gender pay gap statistics, as well as the percentage of men and women receiving variable or supplementary pay, such as bonuses or commissions. While this requirement will initially apply only to companies with more than 100 employees, it will gradually be extended to companies of different sizes by June 2027.
Empowering Employees Through Transparency
Employees will gain unprecedented rights when it comes to understanding their pay. The directive will ensure that workers can request not only their own salary details but also comparative pay levels based on gender for colleagues performing the same or equivalent roles. This could become a powerful tool for workers seeking to challenge discriminatory pay practices. Furthermore, the directive protects employees from any repercussions if they choose to disclose their pay information for the purpose of enforcing equal pay laws. This is a significant shift toward encouraging openness in the workplace, allowing individuals to push for wage equity without fear of retaliation.
Job applicants are also covered under the new directive. Employers will now be required to provide information on the starting salary or salary range for a position before an interview takes place, giving candidates more bargaining power and insight into what to expect in terms of pay.
The Role of HR: More Than Compliance
For Human Resources (HR) departments, the introduction of these rules marks a new era of accountability. In companies with over 100 employees, HR teams will need to carry out detailed job evaluations and pay analysis, ensuring that salary structures are not only clear but also justified. This will likely involve reviewing and restructuring existing compensation models, setting transparent job grades, and defining pay bands for various roles within the company.
But compliance goes beyond mere salary adjustments. Internal communication policies will need to be revamped as well, especially regarding how pay information is shared within the organization. Job postings, recruitment processes, and internal announcements will all need to be aligned with the new transparency requirements. This process could be seen as a challenge, but it also represents an opportunity to modernize HR practices and enhance employee trust.
By tackling these changes head-on, HR departments can use this moment to rethink their approach to salaries and benefits, build clearer career paths for employees, and position their companies as leaders in equitable pay practices. Companies that take a proactive approach to implementing these rules may find that the directive serves as a catalyst for improved internal cohesion and a more positive employer brand.
A Management-Driven Approach
While HR will be on the front lines of this transformation, senior management must play an active role in ensuring a successful transition. This is not just a compliance issue; it’s an opportunity for leadership to demonstrate a commitment to fairness and transparency. Organizations that take a strategic, management-driven approach to implementing these new pay transparency rules could enhance their competitiveness, attract top talent, and foster a more motivated and equitable workforce.
The new EU directive is more than a regulatory shift—it’s a chance for businesses to rethink their approach to pay. With the clock ticking toward 2026, employers have a window of time to prepare. Those who start now and fully embrace the changes will not only comply with the law but may also find themselves leading the charge for a more transparent and fair future for all employees.
