Countdown to EU’s New Law on Pay Transparency: Multinationals Must Move Faster
The Conference Board uses cookies to improve our website, enhance your experience, and deliver relevant messages and offers about our products. Detailed information on the use of cookies on this site is provided in our cookie policy. For more information on how The Conference Board collects and uses personal data, please visit our privacy policy. By continuing to use this Site or by clicking "OK", you consent to the use of cookies. 

Countdown to EU’s New Law on Pay Transparency: Multinationals Must Move Faster

/ Report

The European Union’s Pay Transparency Directive, effective from June  2026, sets new standards for openness and fairness in pay practices. It aims to ensure equal pay for equal work or work of equal value across genders, workers with disabilities, and non-binary or gender-neutral individuals. This report, based on a survey of 78 of Europe’s largest employers, looks at the issues faced by firms to meet the directive’s requirements.

Trusted Insights for What’s Ahead™ 

The European Union’s Pay Transparency Directive, effective from June  2026, sets new standards for openness and fairness in pay practices. It aims to ensure equal pay for equal work or work of equal value across genders, workers with disabilities, and non-binary or gender-neutral individuals. This report, based on a survey of 78 of Europe’s largest employers, looks at the issues faced by firms to meet the directive’s requirements.

Trusted Insights for What’s Ahead™ 

  • Mandated disclosure: Under the directive, firms must disclose pay information to employees and job candidates, demonstrate pay equity, and report annually on their gender pay gap. If the gap is higher than 5%, they must take mitigating action or face mandatory fines. Firms have work to do—research shows that women in Europe currently earn 13% per hour less than men and the gap has decreased only minimally in the last decade. The gap is much higher within the private sectors of countries including Germany (20%), Netherlands (18.7%) Ireland (17.6%) and Italy (15.4%).   
  • Strong concerns from executives. Survey respondents express concerns that the new requirements could expose salary information to competitors. Also, it potentially weakens the link between individual pay and performance because companies may narrow pay ranges to preempt demands to justify the difference between salaries at either end of the range. This levelling effect could reduce managers’ ability to reward their best performers.
  • Wage Impact: The law’s effect on wages is unpredictable. Wages may increase as companies eliminate pay gaps, however transparency on pay ranges could raise the expectations of employees and job candidates. As companies become more cautious about pay disparities between employee groups, the value of pay differentials as a tool for talent recruitment and retention is likely to be reduced. Chief Human Resource Officers (CHROs) may need to revise their pay structure based on reliable data and fair and objective criteria, and communicate this program effectively to internal and external stakeholders.
  • Impact on employees: embedding pay transparency into people processes and regular gender pay gap reporting may contribute to a more inclusive culture, but this depends on clear communication about pay policy and how to interpret reporting data. Survey respondents expect higher quality discussions between managers and workers regarding
This publication is only available to Members. Please sign in to your myTCBTM account to access it. To learn more about becoming a Member, click here. To check if your company is a Member, click here

Forgot Password?

 

Keep my computer signed in

 

By Clicking 'Create Account',
You Agree To Our Terms Of Use

Create Account  

Members of The Conference Board get exclusive access to Trusted Insights for What’s AheadTM through publications, Conferences and events, webcasts, podcasts, data & analysis, and Member Communities.

Authors

Marion Devine

Marion Devine Marion Devine

Principal Researcher, Human Capital, Europe
The Conference Board

Read Bio

Neil McPherson

Neil McPherson Neil McPherson

Council Director, Global Pensions & Benefits Counc…
The Conference Board

Read Bio

Other Related Resources

✕
hubCircleImage