Diversity, Equity & Inclusion
EU Pay Transparency: A Strategic Shift in Talent and Hiring
4 min read
With the introduction of the EU Pay Transparency Directive, the European Union is taking a decisive step toward closing the gender pay gap and fostering greater fairness in the workplace.
Adopted in June 2023, the EU Pay Transparency Directive enshrines the principle of equal pay for equal work between men and women. This is more than a legislative milestone – it's a catalyst for change. Member states must transpose the directive into national law by 7 June 2026, triggering a wave of operational changes for employers across the EU.
For business leaders, this is more than a compliance exercise. It’s a signal that the way we attract, assess, and retain talent in Europe is about to change significantly.
What the Directive Demands
At its core, the EU Pay Transparency Directive mandates greater transparency in how organisations manage pay. From now on, employers will be required to disclose salary ranges in job advertisements or before interviews take place, bringing long-overdue clarity to compensation conversations.
Another key provision bans employers from asking about a candidate’s pay history, helping to break cycles of underpayment that have persisted through repeated job changes.
Current employees, meanwhile, will gain the right to request pay information, including average pay levels broken down by gender and job category for those performing similar work. This introduces a new level of visibility that will likely spark important conversations within organisations.
Larger employers face even greater obligations. Companies with:
- Over 250 employees must report on their gender pay gap annually.
- 150–249 employees must report every three years.
Where a gender pay gap exceeding 5% is identified – and cannot be objectively justified - the company must conduct a joint pay assessment with worker representatives.
These measures are designed to surface and address unjustified pay disparities – systematically and transparently.
Implications for Hiring and Talent Strategy
This new level of pay transparency will reshape how employers compete for and retain talent.
Traditional hiring practices - often reliant on opaque salary negotiations and historical pay data - will need to evolve. With compensation ranges public from the outset, negotiation dynamics will shift, empowering candidates to enter discussions better informed and with higher expectations.
Organisations will need to think beyond pay to remain competitive. That means emphasising career growth, culture, flexibility, purpose, and well-being as part of a broader employer value proposition.
Transparent pay structures will also require leaders to focus more on qualitative attributes. These include a candidate’s adaptability, potential, values, and long-term fit, rather than compensation history alone. This mirrors our own leadership assessment approach, which values holistic potential over historical metrics.
We also anticipate greater talent mobility. Employees, now armed with clearer insights into internal and external pay standards, may seek roles that offer what they perceive to be fairer compensation or more promising career pathways.
The risk of increased attrition is real, but it’s also manageable. Employers that proactively audit internal pay structures, correct disparities, and communicate openly will not only retain more talent but also build a foundation of trust and loyalty.
A Moment of Strategic Opportunity
The EU Pay Transparency Directive represents a turning point. But for forward-looking organisations, it also presents a strategic opportunity.
Those who act now by aligning hiring, compensation, and talent strategies with the directive’s requirements will do more than comply. They’ll strengthen their brand as fair, future-ready employers and stand out in a competitive talent market.
At Odgers, we’re ready to support this transition. Whether its helping organisations evolve recruitment practices, refine their employer brand, or develop strategies to retain top talent, our leadership experts are on hand to guide you through this new era of transparency.
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Get in touch. Follow the links below to discover more, or contact our dedicated leadership experts from your local Odgers office here.
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