Employers are urged to start planning now for the 2026 EU pay transparency directive, focusing on data analysis, early engagement with employee groups, and updating contracts to address potential risks such as public contract bans for non-compliance.
This was the main point made at a Benefits Expert ‘fireside chat’ with David Lorimer, partner at Lewis Silkin and Sally Purbrick, total reward experience specialist at BT. The discussion touched on what EU regulations are coming in and how they will affect UK and global employers as well as managing the greater demand for pay transparency and the employer benefits of being more transparent on pay.
As the 2026 deadline for the EU’s pay transparency directive approaches, employers are urged to begin planning for the changes. Lorimer and Purbrick stressed that proactive preparation, including risk-sharing and early engagement, is crucial for dealing with upcoming regulatory challenges.
Employers should establish a cross-functional team of HR, reward management, and finance specialists, according to Purbrick, to efficiently oversee the pay transparency procedure and guarantee that all required resources are allotted.
She said: “Get a team mobilised, which has reward professionals, has HR professionals, it has finance because there’s likely to be kind of some money that’s required around that.”
According to Purbrick, understanding existing pay data is crucial to identifying disparities. Employers should prioritise gathering and sharing data to ensure compliance with the upcoming regulations.
Purbrick said: “One of the first things from a planning perspective should be to start now, ideally six months in advance. The first place to focus on is the data—understanding what data you have.”
Lorimer pointed out that while 2026 may seem distant, employers only have one pay cycle left to address significant pay issues before they must report their 2026 data. Employers need to act promptly to meet the deadline.
Lorimer said: “2026 implementation seems a long way away. Realistically, you’re going to be reporting on the 2026 numbers. You’ve got probably one annual pay cycle left to understand where the big issues lie and start to try and allocate budget to fix them.”
He also highlighted that failure to comply with the pay transparency directive could result in bans from public contracts, making it imperative for employers to prioritise transparency to avoid legal and financial consequences.
Lorimer also added that pay transparency will likely lead to scrutiny over equal pay, citing past cases where pay disparity issues emerged alongside transparency efforts, which resulted in legal action.
He recommended that employers begin by cleaning and analysing their pay data, including salary, bonuses, and variable pay, to identify and address disparities ahead of the 2026 deadline.
He said: “You can at least be getting your key element data so your salary and your bonus and your variable cost and running that through some analysis to understand, at least at a high level where your problematic problems lie.”
Purbrick stressed the importance of engaging with employee representative groups early in the process to build trust and ensure smooth implementation of the pay transparency measures.
Meanwhile, Lorimer highlighted the importance of updating policies around pay secrecy clauses and publishing pay ranges for job applicants to foster transparency and avoid challenges later on.
Purbrick suggested that employers set short-term goals, such as reviewing and updating contracts, to create a sense of progress and momentum as they prepare for pay transparency regulations.
