HRPA Global Releases Guide on EU Pay Transparency Directive

HR Policy Global’s Tom Hayes and Henry Eickelberg have authored a detailed breakdown and analysis of the key details, questions, and implications of the EU Gender Pay Transparency Directive. Although the text is not yet finalized, and individual member states will have latitude to implement the Directive to fit their countries, 90% of the requirements are certain.

Companies in Europe will face immense data collection, annual disclosure requirements: Companies with employees in EU member states will be required to conduct an annual and extremely granular compensation data analysis to ensure the lack of gender pay gaps of greater than 5%. 

Key details of the requirements include:

• Companies with more than 250 employees in an EU member state will be required to provide annual public reporting. Employing between 100 and 250 employees will trigger a triennial reporting requirement.
  
  
• Companies will be required to gather in-depth, in-country compensation data for all grades and categories of workers (not “employees”) in each individual EU member state. Workers will need to be categorized at least according to the criteria of the EU gender pay transparency Directive – this may differ from a company’s framework. This likely means site-by-site data collection.
  
  
• Compensation will include basically anything of value attributable to the position, beyond salary and bonus and including stipends, perquisites, allowances, etc.

Companies are required to engage worker representative bodies during the data collection process and if a pay gap greater than 5% is found. The Directive implies that if a worker body does not exist, one must be elected.

Outlook: With the EU likely to finalize the Directive in 2023, the typical three-year implementation window would have the first public report due in 2026. HR Policy Global will continue to be a resource as the Directive is finalized and implementation grows sooner.