Pay Transparency Is a Global Phenomenon (and Concern)

The sweeping changes imposed by the European Union (EU) Pay Transparency Directive are inching closer — and most organizations say they’re not ready.

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EU employers have two annual pay cycles to adjust their data collection and reporting processes, identify and address gaps, and make changes to their communication processes, salary bands or job architecture. The first public report, which will be based on pay data from 2026, is due in June 2027 — and many EU employers are already concerned about the changes they’ll need to make:

More than 70% of organizations believe the new rules will have repercussions for them, but fewer than 10% say they’re well prepared, according to recent research from Korn Ferry.
Among employers with major operations in Europe surveyed by Syndio, 47% are concerned about the impact the directive will have on their organizations, and only 12% said they are completely prepared for both pay and career transparency.

“2025 is the year for companies to move from contemplation to action,” said Christine Hendrickson, vice president of strategic initiatives at Syndio. “For employers with employees in Europe, the EU Pay Transparency Directive is no longer a distant concern.”

The Broad State of Pay Transparency

The directive applies not only to employers headquartered in the EU but also those with any employees there, with reporting required for businesses with 100 or more payrolled workers.

While the EU directive does not apply to the United Kingdom, organizations in the UK are also considering increased transparency, with 54% planning to share pay ranges with their employees in the future and 52% considering sharing a pay transparency commitment, according to WTW.

The EU directive may serve as a guide for future pay transparency laws in the United States.

Organizations with operations in both the EU and the UK may institute EU-compliant pay transparency processes in the UK. “Otherwise, their employees will have very different experiences simply based on location, and that runs the risk of reducing employee trust and engagement,” said Gail Greenfield, executive vice president of pay equity and total rewards strategy and solutions at Trusaic.

The EU directive also may serve as a guide for future pay transparency laws in the United States, Hendrickson said. U.S. laws thus far have been introduced on a state-by-state basis, starting in Colorado and with other states joining the charge (most recently New Jersey). Hendrickson predicted that under a Trump administration in the coming years, additional pay transparency laws are more likely to be added at the state level rather than from federal action.

Even without federal U.S. requirements, many organizations with employees in multiple states are considering or enacting a national policy related to pay transparency rather than having piecemeal policies in each state. Greenfield noted this choice streamlines employees’ and candidates’ experiences and reduces administrative burden on the employer.

“We will see more interactivity and more adoption of beyond-local pay transparency practices across the world,” said Serkan Sener, senior client partner and EMEA (Europe, the Middle East and Africa) total rewards practice leader at Korn Ferry.

Challenges with Transparency

One factor contributing to employers’ lack of readiness for stricter transparency requirements is inconsistency in pay decisions. Twenty-four percent of respondents in Syndio’s survey said they regularly deviate from their organization’s stated pay policies.

European organizations surveyed by Korn Ferry listed “employee communications” and “defining work of equal value” (a structure required by the EU Pay Transparency Directive rather than the more commonly known “equal pay for equal work”) as their largest pay-transparency challenges. Many employers do not have a formal categorization that fits this structure, meaning not only do they not have compliant compensation in place, but they don’t have a communication plan for when workers ask their managers about their salaries, Sener said.

“Traditional ‘equal work’ laws can miss subtle biases that undervalue certain roles, often those traditionally held by women,” Hendrickson added. “The ‘equal value’ approach forces employers to look deeper and ensure all employees are compensated fairly based on the real worth of their contributions.”

Act Now

While changes won’t happen overnight, Greenfield proposed the following “good pay hygiene” tips to help organizations lay the foundation for long-term pay transparency:

Establish a thoughtful job architecture and map employees to the correct roles.
Ensure current employees are paid in the range for their role.
Make a plan to address pay compression.
Conduct regular pay equity reviews to identify and remediate inequities.

“Failing to prioritize pay transparency now could lead to legal challenges and reputational damage down the line,” Hendrickson said. “And, frankly, the law is the least of the worries employers should have. Employees, especially younger generations, expect pay transparency. Employers who are open about pay have an advantage in attracting and retaining talent. And, losing on talent impacts the bottom line far more than any pay equity payout.”

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