As employers operating in the EU prepare for the EU Pay Transparency Directive, 51.9 percent are looking to roll out equal pay arrangements across their whole organisation, which will include their operations in non-EU countries.
This has clear implications for employers in the UK even though the UK is no longer an EU member.
The EU directive came into force in June 2023 with the provision that EU member states have until June 2026 to transpose the directive into national legislation. But countries don’t have to wait until the deadline to take action.
Sweden became the first member state to release its draft local legislation in mid July 2024.
Korn Ferry surveyed executives in more than 30 EU countries to gauge how prepared they are for the changes in pay transparency rules.
The findings, outlined in its Transparency Report, found that 85 percent of companies surveyed are aware of the directive and 72 percent believe the directive will have implications for their business.
‘Not prepared at all’
In spite of the looming deadline, the research showed that a worrying 16.6 percent said their business was ‘not prepared at all’, while 73.5 percent said their employer was ‘somewhat prepared’ and less than one in ten (9.9 percent) executives said that their employer is ‘well prepared’.
More than half (51.5 percent) admitted that when it comes to explaining gender pay gaps they were not clear about which factors could be considered to be gender neutral.
Nearly a third (29.2 percent) of employers plan to implement full transparency of salary bands and grades.
Among employers who are already preparing for the new rules, 87 percent said they were examining market driven pay as part of ensuring pay equity.
More than half (54.2 percent) said organisational transformation will be necessary to ensure that equal pay is sustainable in the long term.
Major barriers
The report identified major barriers to pay transparency as GDPR compliance, resistance to change, negative employee reactions, poor data quality and tools, local legislation, issues with communication and change management, and cost.
HR will have a key role to play in ensuring effective communication and change management, as well as being required to be aware of the rights and requirements related to this, the report said.
It also highlighted employer concerns about negative reactions from employees due to existing pay inequalities and the impact of this on morale and retention.
