New Year, same EU Pay Transparency Directive – actions to take now!

A New Year, same EU Pay Transparency Directive – preparatory actions to be taken right now.

As we step into 2025, Belgian companies have a unique opportunity to lead the way in promoting fairness and equality in the workplace. The EU Pay Transparency Directive, aimed at addressing gender pay gaps and ensuring wage equality, should be transposed into national law by 2026. This is the perfect time for companies to start preparing and showcase their commitment to transparency and equality as part of their broader Environmental, Social, and Governance (ESG) strategy.
 

What is the EU Pay Transparency Directive?

First introduced in 2021, the EU Pay Transparency Directive is a pivotal part of the European Commission’s broader effort to close the gender pay gap and promote equal pay for equal work across the EU. This groundbreaking directive mandates that employers in member states provide greater transparency in their pay structures and actively address gender pay disparities.

For companies with over 100 employees, this means implementing clear pay reporting and take corrective measures to rectify any gender-based pay inequalities. Key components include:

1. Salary transparency for job applicants: Businesses will have to disclose salary ranges in job listings, offering a clearer overview of potential pay for specific roles.
   
   
2. Pay reporting: Employers will need to publish detailed reports on their pay structures, broken down by gender. This will involve making information on average wages, bonuses, and other benefits available to all employees. Employees have the right to request information about their individual and average pay levels, for categories of employees performing the same work or work of equal value, broken down by sex. The employer must provide the information within two months of the request and is also required to inform employees of this right on an annual basis.
   
   
3. Salary audits: Companies will be required to regularly assess whether there are any gender-based pay gaps and provide explanations for these disparities. If a gap is identified, employers are obligated to take concrete actions to address and rectify it.

The deadline is approaching

With the 2026 compliance deadline approaching, companies have just one year to meet the Directive’s requirements. While the implementation process may seem complex, it is an excellent opportunity for companies to review and enhance their salary and job structures, remuneration frameworks, governance, reporting systems, and internal audits to address gender pay gaps. Given Belgium's progressive stance on gender equality, there is an expectation that the government will make swift progress in transposing the legislation into national law. Therefore, prompt action is essential.
 

The Benefits of Compliance

Embracing the Pay Transparency Directive can bring numerous benefits to your company:

• Trust of your most important stakeholders – your employees: It shows that you have nothing to hide and are dedicated to upholding the highest standards of equity and transparency. This proactive approach allows you to craft a positive narrative, ensuring that you do not lose the trust of your employees by being unprepared.
  
  
• Competitive Advantage: Companies that proactively address pay disparities can gain a competitive edge in the market, appealing to customers and clients who value equality and fairness.
  
  
• Legal and Financial Security: By complying with the Directive, companies can avoid potential legal and financial risks associated with non-compliance.
  
  
• Strengthened ESG Strategy: Integrating pay transparency and gender equality into your company’s ESG strategy underscores your commitment to social responsibility and governance, enhancing your overall ESG performance and appeal to investors.
   

How to prepare in the next year

• Assess readiness: Evaluate the current situation and desired scenario, covering job structures, remuneration frameworks, and governance structures.
  
  
• Develop an action plan: Identify gaps and areas for improvement based on the readiness assessment.
  
  
• Audit pay practices: Conduct internal audits to identify and understand the root causes of any gender pay gaps.
  
  
• Prepare for public reporting: Plan and set up systems to collect and analyze pay data for public reporting by job categories and gender.
  
  
• Train HR and management teams: Ensure they understand the Directive's requirements and can guide the company through implementation.
  
  
• Consult with experts: Seek assistance from EY’s Reward team for navigating complex regulatory requirements effectively.

Conclusion

As 2025 begins, the EU Pay Transparency Directive presents a significant opportunity for businesses in Belgium and across Europe. Now is the time to act. Keep in mind, it is not just about meeting a legal requirement; it is about fostering fairness, transparency, and equality within your organization.