Pay transparency is coming, are you ready – start early and turn its requirements into an advantage
In the current talent shortage, companies should look for ways to positively distinguish themselves in the job market. One perhaps surprising method is the promotion of pay transparency. By starting now, a company can turn the requirements of the pay transparency legislation to its advantage and be a forerunner that stands out from its competitors. Meeting the pay transparency requirements, after all, cannot be completed overnight.
The law regulates all employers
What does pay transparency mean in practice? It does not mean publishing all employees’ salaries nor paying everyone the same salary for the same position. Instead, pay transparency means that salaries and salary differences are based on clear criteria, such as the demands of the position, the employee’s skills, and performance.
“Pay transparency requires an increase in knowledge related to salaries and in the skills of supervisors. Of course, the new EU directive also requires many other things, such as systematic specification, reporting, and the elimination of unjustified salary differences”, says Accountor’s Senior Consultant Sari Leskinen.
Do you think pay transparency does not concern your company? You might be wrong.
The new pay transparency directive and EU countries’ national legislation that will be enacted by the summer of 2026 at the latest, apply to employers of all sizes in the private and public sectors in the EU. Going forward, employees will have the right to know the average salaries of employees doing the same or equivalent work, broken down by gender. Many companies are far from this.
An ace up your sleeve
“We have asked companies that use Accountor’s recruitment services whether they want to share the salary range for a position in their job advertisements. Regrettably, few companies are ready to do so, even though some are willing to”, says Accountor's Senior Recruitment Consultant Mira Svedholm.
It’s in the interest of companies of all sizes to act in time if they wish to remain competitive in the labour market. Soon, the tables will turn: if a company does not implement the actions required by pay transparency legislation, it will appear in a negative light.
“I think that companies should quickly utilise this ace up their sleeve and take advantage of it. It’s important to remember that disclosing a salary range is not a promise of a salary. Salary negotiations are always part of the recruitment process”, continues Svedholm.
Disclosing a salary range in a job advertisement does not equal an employee’s salary
Meeting the requirements for pay transparency legislation can also be achieved without directly disclosing a salary range in a job advertisement. It must, however, be communicated in another way before the job applicant comes to an interview – without them having to ask for it.
When a company has the structures that are compliant with the pay transparency legislation in place, employees and job applicants perceive it as promoting fair and equal treatment. Pay transparency also saves time for both the job applicant and the employer, as applications that are unsuitable due to salary expectations do not need to be created or processed.
How to start promoting pay transparency
What does meeting the requirements of pay transparency legislation demand from companies? Or how to start promoting pay transparency?
"The most important thing is to recognise the company’s current situation and what types of corrective actions or development measures are needed. In practice, it’s best to start by reviewing roles and role families as well as job descriptions. If they don’t exist, they need to be created to objectively assess and compare positions of different job grades. Also, you should examine the salary differences among employees in positions of the same gob grade, also separately for men and women. The necessary measures should be initiated now as levelling unjustified salary differences may take several years”, summarises Leskinen.
Understand where your company stands in relation to the requirements of the pay transparency directive and what development measures are needed.
According to Leskinen, structures and principles related to determining salaries must be defined if they do not already exist. In practice, this means specifying job grades for positions and the salary variation range at different grades. Principles and practices for evaluating skills and performance must also be clear so that salary differences can be justified by differences in individuals’ experience, skills, and performance.
“All related topics must be documented so that they can be openly communicated to both current employees and job applicants. The information must also be available in HR systems for each employee correctly. In addition, supervisors need knowledge and skills on the subject”, adds Leskinen.
Start promoting your company’s pay transparency with these steps:
- Analyse your company’s current situation and salary structure
- Develop clear principles for compensation
- Start levelling unjustified salary differences
- Train supervisors
- Assess your company’s expertise and resources for meeting the legislation’s requirements.
Companies would do well to analyse their current situation now. Not all required development work needs to be done in-house, though. Competent HR professionals, such as those in Accountor’s HR services, can assist in all these areas.
