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03 May 2024
by Eva Jesmiatka, Tom Wooldridge

3 ways technology can help with EU pay transparency requirements

By shedding light on pay disparities, the EU Pay Transparency Directive aims to encourage companies to address gender-based wage gaps

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The EU Pay Transparency Directive aims to tackle the gender pay gap by mandating companies to report on their pay structures and promote transparency in remuneration.

This is an excellent step towards demonstrating pay equity and delivering pay transparency.

However, the reporting requirements will have a transformational impact on organisations.

The directive requires companies with 100 or more employees operating within the EU to disclose information regarding their pay structures.

Specifically, Article 7 states that workers have the right to request and receive written information about their individual pay level and the average pay levels for workers in the same or equivalent positions, as well as the average pay of a man and a woman doing the same or similar work.

By shedding light on pay disparities, this directive aims to encourage companies to address gender-based wage gaps and deliver equitable remuneration practices.

What employees need to know

The reporting requirements encompass various aspects of pay equity. Employees must know and understand the following:

  • What determines their total rewards package – inclusive of the value of their pay and benefits – as well as their pay progression
  • The average pay of immediate peers doing similar work, broken down by gender
  • The pay rate for their role and others, viewable in new job postings (or on request prior to first interview)
  • Gender pay gaps within the organisation for every level/category of worker within the organisation

Naturally, this information will help employees assess whether or not they are paid equitably and lead to questions, particularly for those employees paid below average. Employers must be prepared to answer these inquiries in a timely and consistent manner.

How technology can help

With the vast amount of data that needs to be collected, analysed and reported, technology can streamline and automate the process, making it more efficient and accurate.

1. Data collection

The systems organisations already have in place can enable employers to gather and organise pay-related information.

Most payroll systems, HR databases and performance management systems come with tools to collect data, ensuring comprehensive and accurate reporting.

By automating data collection, typically with help from a company’s IT department, employers may reduce the risk of human error and save valuable time and resources over time.

2. Analysis

Advanced analytics tools can process large datasets, identify patterns and generate meaningful insights.

This enables companies to analyse their pay structures, identify gender pay gaps, and assess the effectiveness of their remuneration policies both within the company as well as within roles with matching responsibilities.

Technology can create efficiencies in working through large data sets, getting the numbers calculated and sharing information with relevant employees.

This leaves more time for companies to focus their efforts in addressing any underlying issues and making progress on their broader diversity, equity and inclusivity commitments.

Yet, larger companies will need to work out what the outcomes of the tech-based analytics mean for them, and how best to integrate them with their wider agenda.

3. Reporting

Technology can also generate reports in user-friendly formats, making it easier for companies to comply with the company-wide data reporting requirements of the directive and provide accessible information to employees, stakeholders, and regulatory authorities.

As workers will have the right to request and receive information about their individual position, organisations will need to plan to fulfil these requests in a timely manner, either by completing a report individually, on-demand with each request, or by sharing this information with all individuals via annual statements or a real-time digital communication tool.

While businesses may face administrative challenges, compliance with the reporting requirements presents an opportunity for organisations to review and rectify any gender pay disparities.

And for the many companies that look to increase gender balance across all levels of the organisation, a multi-faceted approach will be necessary.

Ultimately, the directive aims to create a more equitable and inclusive work environment, benefiting both employees and businesses alike. Technology can help organisations not only meet the minimum requirements, but also take the employee experience to the next level.

In partnership with WTW

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