Using EU Pay transparency to help close gender pay gaps

European legislation which comes into effect next year should be the catalyst for a more holistic strategy of equity.

The EU Pay Transparency Directive comes into effect in 2026, marking a significant step forward in the drive for gender pay equity.

This regulatory shift is not only a powerful tool for driving corporate accountability, but it should also serve as a strategic guide for organisations to rethink and reshape their reward strategies - not just for compliance, but for true equity.

To meaningfully close gender pay gaps, employers must move beyond just thinking about compliance and, instead, embrace a holistic approach to reward – one that embeds equity, transparency, and inclusivity across the entire employee experience.

Transparency: A starting point

Transparency will expose disparities that may have remained hidden, empowering employees to ask important questions and hold organisations accountable.

But disclosure alone doesn’t fix inequity. The question becomes: once pay gaps are visible, what action will you take?

Now is the time to act. With the directive not enforced until 2026, organisations still have the opportunity to proactively design equitable policies and reward strategies - ones that align with their vision, values, and culture while embedding transparency into every layer of total rewards.

Redefine reward strategy

A total reward strategy should encompass more than just pay.

It should reflect how employees are rewarded, supported, and recognised - financially, professionally, and personally.

This means reviewing your entire reward package and Employee Value Proposition (EVP) with fresh eyes.

Key areas to focus on:

Salary and bonus: Ensure pay is equitable not only within roles, but across functions and departments. This is key to the EU Pay Transparency legislation. Remember that any employee will have the right to access pay data, and you will need to publish salaries of new roles when advertised.
Benefits: Think about whether your benefits are inclusive and relevant. Do they meet the real, evolving needs of your employees – including flexibility, wellbeing and support?
Career development and progression: What are your career pathways for advancement? Are they clear, accessible to all, and equitable? Do you have different progression options (e.g. technical specialist vs traditional management route)?
Recognition: Do you have consistent, fair systems in place? Are they based on clear criteria and applied equitably across the workforce?

Taking a holistic view allows organisations to uncover and address structural issues that contribute to pay gaps - such as uneven access to advancement or inconsistent reward practices.

Why a holistic approach matters

Beyond compliance, a strategic, holistic approach to rewards offers reputational benefits.

In a future where transparency is the norm, stakeholders - including employees, candidates, investors and regulators - will pay close attention to how organisations respond.

A proactive stance today not only ensures readiness for 2026, but also enhances your employer brand, strengthens employee trust, and positions your organisation as a leader in equitable workplace practices.

How to embed pay transparency in practice

To successfully prepare for the EU Directive and move towards long-term equity and transparency, organisations should focus on four key actions:

Conduct regular pay equity audits: go beyond gender pay and look at overall equity within your organisation, highlighting any issues you have and areas for improvement to surface and address systemic gaps.
Review job descriptions and job evaluation frameworks: look at how your organisation creates job descriptions and ensure they are an accurate reflection of the role (not the individual performing the role) and review how you evaluate each role. These need to be standardised to ensure consistency and equality across the company.
Invest in training, particularly for leaders and managers: it is imperative that they are able to identify and mitigate bias in your reward and recognition processes.
Foster open communication: communicate with your employees and create an environment which supports open discussions around equity, development, and career opportunities.

In conclusion

The EU Pay Transparency Directive should not be seen as a tick-box exercise. It’s a strategic opportunity.

By reviewing reward and recognition holistically, you can build a transparent, equitable and inclusive strategy that enhances talent attraction, retention, and engagement.

Don’t wait for the legislation to make it mandatory. Start now.

Build a reward framework that’s not only compliant and helps close pay gaps, but is truly meaningful, competitive, and tailored to your organisation.