Based on our Pay Transparency online survey conducted in September 2024
About the EU Pay Transparency Directive in a nutshell
The directive, which came into effect on June 6, 2023, aims to reduce gender pay gaps and promote workplace equality by increasing transparency in pay systems. Organizations must establish a wage structure that ensures equal pay for women and men performing the same or equally valued work.
The directive requires regular monitoring of gender pay gaps and the implementation of necessary measures if the gap exceeds 5%, to ensure equal pay. Employers must prepare to be able to provide wage reports in compliance with the regulation and ensure the pay structure related information flow. This requires a job evaluation system based on objective, gender-neutral criteria, as well as a transparent pay system and employee communication in line with the directive.
What are employers' obligations under the Pay Transparency Directive in practice?
- Transparent wage structure
- Reporting obligations
- Joint wage review
- Information for employees
- Recruitment
Transparent wage structure
A transparent wage structure, based on objective, gender-neutral criterias, should be in place to allow for the evaluation of employees in terms of the value of their work, ensuring that they are compensated equally and accordingly.
Reporting obligations
Annual reports should be prepared to present pay differences, and in cases where the gap exceeds 5%, steps taken to address the inequality must be included.
Joint wage review
Regular checks on gender pay gaps should be conducted to identify potential inequalities. A joint pay evaluation must be carried out to identify, remedy, and prevent unjustified differences in pay between female and male employees that cannot be explained by objective, gender-neutral criteria.
Information for employees
Employees must be regularly informed about the pay policy and any changes. An open communication channel should be provided where employees can ask questions about their pay and the compensation system.
Recruitment
Job advertisements should include the minimum salary level or salary range for the position.
“Fair compensation and equal opportunities are built on objective, transparent, and well-communicated HR processes. The benefits of such practices are enjoyed not only by women and disadvantaged groups but by the entire company, fostering a more committed and motivated workforce.”
What HR processes and systems are affected by the Pay Transparency directive?
Recruitment selection: Pay transparency must be ensured during recruitment and selection, even before hiring. Employers cannot inquire about candidates' current salary details.
Job evaluation: The principle of "equal pay for equal work," as outlined in the directive, can only be met if job positions are comparable. This requires a job evaluation system based on objective, gender-neutral criteria.
Compensation strategy: The principles and rules of the pay policy must be clear and accessible to employees. Employees have the right to request information regarding their pay from the employer.
Talent management: The expectations and criteria for career advancement must also be objective and accessible to employees.
What PwC can help you with
Our modular service is designed for flexible use, allowing you to tailor it to your specific needs. Whether you require a comprehensive package or just a few selected modules, our adaptable approach ensures you receive precisely what you need.
Learn everything about the directive, receive ready-to-use kick-off communication material package and get a high-level readiness analysis
Find out if your processes, your job architecture, the way of working and the available information for the employees comply with the directive and get a list of action points
Get a gender pay gap reporting tool built according to the directive and for future use and see the result of the gender pay gap analysis
Have comprehensive expert help to implement the necessary action points to ensure the organization readiness to meet the requirements
