By the middle of next year, businesses in EU member states will have to provide information on pay ranges for job candidates. The move bans pay secrecy clauses, and asking about a candidate’s remuneration history, and paves the way for taking action if a gender pay gap exceeds 5%.
Commentators suggest that the global direction of travel is that pay transparency is coming; meaning that, even for businesses in the UK, there will have to be a move towards greater transparency.
The UK already has a pay gap reporting scheme and, according to data from the job board Indeed, has seen a 49% increase in salary transparency in job ads since 2019; more than seven in 10 job posts now include pay details.
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Duncan Brown, principal associate at the Institute of Employment Studies, explained: “A key issue for multinationals is whether to just reflect the legislative minimum action in each country separately, and do nothing if there's no country legislation, or to adopt a common standard across all countries, set at the highest country requirement.”
Rachel Gibbs, pay transparency specialist at Merities Consulting, added: “The crown which the UK carries high will surely get knocked off as all employers, regardless of size, in the EU will need to share transparent starting salaries or ranges.”
For firms that want to improve their pay transparency, there are clear steps. Gibbs suggests reviewing job levels based on gender-neutral factors, ensuring that salaries, benefits and incentives across the levels fall within a range of 5%.
Managers must play a role in this too, Gibbs added, advocating an integrated HR approach so that everyone from recruitment and compensation and benefits is aware, as well as ensuring the right data is obtained for agency staff.
“There is much to do and just over 12 months left,” she said.
Though the top-line data from Indeed suggests that the UK is ahead on pay transparency, 2024 research from CIPD and ADP found that largely, the only pay inequality analysis generally carried out by firms is the legally mandated gender pay gap reporting (44%).
Read more: The UK leads on pay transparency, data suggests
Around half (54%) of organisations check that employees understand their pay.
For Jessica Pillow, director of total rewards at HR solutions software Deel, there is work to be done auditing pay structures, ensuring clarity for all staff around pay, and taking a trust-building rather than a mere compliance approach.
She admits this will create work for HR, not least in facilitating complex conversations around pay and employee expectations, but advised that this work should take place sooner rather than later.
“With the right groundwork in place, the long-term benefits – like improved morale, a stronger employer brand and a more inclusive culture – can far outweigh any short-term disruption,” said Pillow.
