EU Pay Transparency: Move beyond metrics, drive meaningful change

The EU Pay Transparency Directive (EU PTD) is more than a compliance requirement, it’s a defining moment. It reshapes how fairness, equity and transparency build trust in the workplace. While the Directive outlines what you must report, the real opportunity lies in how you respond. This is your chance to go beyond the numbers and use analytics to create lasting change.

If you employ 100 or more people in an EU member state, you will need to report multiple gender pay gap metrics. These must be broken down by category of workers and shared with employee representatives. Any unadjusted gender pay gap over 5 percent, whether in base pay or variable pay, must be justified or corrected.

The Directive doesn’t tell you how to justify gaps. That’s where leadership comes in. Many employers are already using adjusted pay gap methodologies to uncover the real drivers of inequality. These statistical approaches, when designed to be objective and non-discriminatory, don’t just explain disparities. They help you focus your efforts where they will have the greatest impact.

Employee representatives can challenge your methodology and conclusions. That makes transparency and credibility essential, not just in your numbers, but in how you arrive at them.

The Directive gives you flexibility in how you analyse pay gaps. That’s an opportunity, but also a responsibility. We recommend using an adjusted pay gap approach, such as multiple linear regression analysis. It helps you strip out defensible differences, isolate the true drivers of inequality and take targeted action.

Some employers are building their own models, tailored to their job architecture and pay philosophy. Others are bringing in external experts to co-create or validate their approach, ensuring compliance, avoiding bias and aligning with business needs.

You might also consider pay equity tools. Off-the-shelf solutions can help with compliance but choose wisely. The best tools adapt to your structure and philosophy, and support not just measurement but remediation and prevention. Our collaboration partner Syndio, for example, offers a robust platform to analyse, report and act on pay gaps. HR platforms also offer extensions to support compliance.

In some countries, third-party audits are another option. While not required by the Directive, they send a strong signal. In Switzerland, for instance, certifications like EQUAL-SALARY show you are serious about equity and have nothing to hide.

1. Start early
   Test your unadjusted gaps using your planned worker categories. This gives you time to justify or remediate before reporting deadlines.
2. Define your justification strategy
   Use adjusted pay gap analysis to pinpoint which gaps are real and which employees may need pay adjustments. This is complex, so consider external support or specialised software.
3. Refine your worker categories
   Are your groupings too broad? Could they be creating artificial gaps? Test and refine early. If salary adjustments are needed, communicate clearly and consistently. Align your messaging with your pay philosophy and transparency goals. Make sure your tools support ongoing equity so you can prevent new gaps in hiring, promotions, bonuses and pay reviews.

The EU Pay Transparency Directive is your opportunity to lead. With the right approach, you won’t just meet the requirements. You will build a more transparent, equitable workplace where fairness is more than a value, it’s a practice.

Meaningful change goes beyond simply meeting the reporting requirements of the EU Pay Transparency Directive. The challenge is to use the insights gained from pay gap analyses to foster a culture of fairness, equity, and trust within the workplace. By addressing the root causes of pay disparities, organisations can create an environment where employees feel valued and treated equitably, which can lead to improved morale, retention, and productivity. Meaningful change also means embedding pay equity into broader talent management practices—such as hiring, promotions, and performance reviews—ensuring that fairness becomes a sustained and integral part of the organisation's operations. Ultimately, it is about transforming compliance into an opportunity to lead with purpose and build a workplace that reflects the values of transparency, fairness and inclusion.

This is the second in a seven-part series on turning compliance into opportunity. In this series, we will explore how external pay transparency shapes your employer brand, how internal transparency builds trust, what it means to be an adequate wage employer, why culture is key to sustaining equity and how EU member states are progressing with implementation.

To explore further:

• Read the first article in the series New EU legislation: implications on pay transparency to learn more about the directive and how organisations can embrace the Directive to build fairer, more inclusive workplaces.