EU Pay Transparency Directive: Why global organisations are using TRS as a core strategy
The EU Pay Transparency Directive is gaining attention as it aligns EU member states with common standards for equal pay, strengthening existing regulations.
As well as being a significant step towards closing the gender pay gap, the directive also has important implications for reward and benefits strategies.
The directive poses new compliance challenges for global organisations, but it also presents a unique opportunity to refine total rewards strategies and improve the use of total reward statements (TRS) to better communicate the full value of employee compensation.
How ready are HR and reward leaders for the EU Pay Transparency Directive?
Benefex surveyed HR and reward leaders to assess their readiness for the directive, and the results show a significant divide.
Only 3% of organisations are fully prepared, while 57% lack a defined plan.
The majority expect their reward teams to lead compliance efforts, supported by HRIS and global benefits platform providers.
Notably, only 24% of respondents currently offer TRS to the majority of their employees, reflecting a gap in communicating the full picture of employee rewards - a key aspect of the directive.
With the 2026 deadline approaching, it’s clear many organisations still need to catch up.
The global pay transparency landscape
Pay transparency laws have been introduced worldwide, addressing not only gender disparities, but also inequalities across race and disability.
And each country takes a unique approach to meet its specific goals. These laws aim to promote fair pay and empower employees in salary negotiations.
The EU Pay Transparency Directive expands on this, incorporating benefits like health insurance, company cars, and pensions into its definition of total rewards.
TRS provide a practical solution for organisations, offering a comprehensive view of rewards, helping organisations address pay equity.
Challenges with country-specific reporting
Each member state will have its own thresholds and guidelines, creating potential discrepancies in reporting, and adding complexity for companies operating in multiple countries.
TRS offers a solution by consolidating reward data and providing a consistent framework across multiple jurisdictions, simplifying compliance.
How organisations are preparing for the change in legislation
Organisations will need to gather pay and benefits data from various sources, including HR systems, payroll, insurers, brokers, and advisors.
However, some may encounter challenges when attempting to compile this data manually, which can be a heavy lift.
Starting early to determine data sources will streamline the preparation process.
Employers also need to review pay structures and benefits offerings to ensure compliance with gender-neutral criteria.
TRS provide a clear, customisable snapshot of each employee’s total rewards package, helping to identify and address disparities.
Companies that discover significant pay gaps should analyse the underlying causes, considering market rates and employee demographics, and develop a suitable plan to address them.
Clarity on each EU country's specific reporting guidelines will emerge leading up to the June 2026 deadline.
Companies should be ready to implement reporting processes and establish an ongoing framework to maintain compliance.
The role of TRS in valuing pay and benefits
An area of uncertainty among reward and benefits leaders lies in how components like pensions and supplementary benefits will be valued.
TRS simplify this by offering a consolidated view of both mandatory and employer-specific benefits, making it easier for employees to understand the full value of their compensation.
How technology will help support organisations through this process
To manage the extensive preparations required, organisations will need to utilise technology to support their efforts.
Many processes involved in data collection and analysis can be labour-intensive and manual.
Implementing technology can help automate these tasks, reduce the manual workload, and improve overall efficiency.
This includes integrating systems to pull data from various sources and supporting compliance reporting to adapt to the evolving legal landscape.
TRS clearly communicate pay structures and benefits to employees and mitigate employee concerns about transparency. Implementing a digital platform that consolidates all reward data can streamline this with TRS that include both salaries and benefits.
Looking ahead
Overall, the EU Pay Transparency Directive is pushing for a deeper level of transparency across total reward structures.
TRS are the tool to offer transparency by communicating the full value of employee compensation.
As we await more specific guidelines, organisations should begin assessing their current practices and ensuring they are equipped to meet the demands of the directive.
To delve deeper into these insights, watch the Benefex on demand webinar The EU Pay Transparency Directive: Are you ready for a new conversation about total reward?, where Adam Mason, EVP at Benefex and Elouise Rolo, director of Global Benefits, Sequoia, look at how global organisations are using TRS as the core pillar of their strategy around pay transparency.
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