Pay Transparency is Coming… But Are We Ready For It?

In 2024 a new EU Directive will come into force that will see EU member states having to adhere to new rules around pay transparency, full details in this report from?Deloitte. I’ll let them deal with the legals, and I’ll focus on the cultural impacts.

In short though companies operating in the EU will need to:

• Be transparent in job adverts and hiring processes with what they are paying for the role
• Not ask candidates what they are being paid now, or previously paid in other roles
• Provide employees upon request annually with a breakdown of pay levels across the business based on category
• Gender Pay Gap reporting threshold comes down to companies that are 50+, not 250+ as is the case in the UK now
• Be more transparent with career progression and how pay levels are determined.

It’s worth clarifying of course that this is EU specific, and won’t officially affect UK employment, but the advice wholeheartedly is that UK companies start getting on board with this now, especially if you operate in the EU as well. The US is already further ahead with this too, with a number of States who have laws around transparency.

So… Are We Ready For It?

As jobseekers and professionals, absolutely! As companies? — The vast majority absolutely?not!?There’s a heap of work to think about, but let’s try to break it down below for anyone panicking right now…

Internal Review / Audit

Before you go careering off and slapping salaries on all your job adverts, tread carefully. Think first about your current employees, not your potential ones. Before you attempt transparency, get your house in order first. Run a thorough pay review internally as a business- understand whether people are being paid fairly as current employees, vs the levels you are likely to be hiring at, so that when they do see that job advert there’s not an angry mob banging on your door demanding answers.

Communicate

Yes, this is coming into force in 2024, but don’t wait until then to rush it. You’ll make mistakes. Start planting the seeds now, and find a way of communicating this to the business ASAP, so that you can give early context around why you might be running reviews, and what changes they can expect. Be transparent (That’s what this is all about anyway right?!) and explain the directive to them and the fact this is a really good thing. YOu’ll get massive kudos for being proactive and actioning this early from your employees, rather than being seen to hold off as long as you can. Rushing this a couple of months before deadlines will cause big cultural shockwaves. Get your internal comms plan in order and again think about your current employees first. Don’t let culture take a hit.

Fine Tune Hiring

Lots of work needed here- more than you might think. Job advert changes are just the tip of the iceberg. As part of your internal pay review you need to also understand what competitive compensation looks like. Heaps of resources and tools out there for you to use, including the likes of?Figures, and?Pave?to name a couple.

If you don’t get this right, and you wing it, you’ll stand to miss out on a lot of applicants if you are not in line with minimum expectations from candidates.

You also need to look at refreshing your interview training with teams; given the above changes suggest that you no longer are able to ask about salary information it’s vital you get this engrained in your interview process and employees minds now. You don’t want to cause yourself future headaches. Plan ahead, and start training earlier than you need to. No reason why you can’t build that habit now.

Progression

By the sounds of it you will need to start being prepared to show candidates, even at interview stage what progression looks like and how pay criteria is set at each level. Some companies do a brilliant job of this, but others don’t have their house in order yet, and still have no firm progression frameworks in place for teams and roles. Get it sorted!

Progression.fyi?is a great resource for this stuff.

This is essential to your culture and EVP as a business anyway- if you don’t have it in place this is your chance to get it sorted now- and it’s not a quick project, so use 2023 to plan ahead and get this done!

There’s a lot more to this directive than simply having to throw salary information on job adverts that can impact the culture and EVP of your business, so take this seriously and act now. The good news is that it will have an awesome impact on your company if done well.

If I can offer any more advice or assistance over a coffee to furrowed brows reading this then please so drop me a note on?LinkedIn?too!