#None #Trusaic #EU Pay Directive #Pay Equity

The Ticking Clock: EU Pay Transparency Directive Compliance

As the deadlines approach for the European Union's Pay Transparency Directive (EUPTD), many organizations seem to be unprepared, prompting urgent calls for action. Trusaic's latest research indicates that a mere 16% of organizations can meet the upcoming requirements based on their current pay equity practices, revealing a shocking lack of readiness among businesses across the EU.

What Is the EU Pay Transparency Directive?

The EUPTD is set to take effect in June 2026, designed to tackle pay discrimination and address the persistent gender pay gap across member states. This new legislation introduces stringent obligations for organizations, including mandatory transparency in reporting compensation data and providing employees the right to know their pay relative to others. Employers will be responsible for justifying any discrepancies in pay based on gender and are required to address any identified inequities promptly.

The Research Findings

According to the 2025 Pay Equity Policies and Practices Report compiled by Trusaic and Empsight, the lack of compliance readiness is stark. The report surveyed compensation professionals from 429 large organizations, where a significant 76% had European operations. Here are some key findings:

• - Minimal Understanding of Requirements: A substantial number of organizations do not fully grasp what is expected to comply with the EUPTD. Only 16% can meet its requirements using base pay calculations. The numbers dwindle significantly when considering total cash compensation (3%) and total direct compensation (2%). This oversight can mask true gender disparities and undermine the essence of the directive.
• - Limited Transparency: While organizations are beginning to analyze their pay equity, transparency remains largely an internal affair. Most companies share salary information with senior management and HR teams only, rarely disclosing this data to employees, which limits accountability.
• - Lack of Analytical Rigor: Approximately half of the organizations rely on basic statistical methods to assess pay equity. However, only 37% employ more sophisticated techniques such as multiple regression analysis—an essential method to meet the requirements of the EUPTD effectively.
• - Timing Concerns: The report highlights that many organizations are not conducting annual assessments of pay equity. While there is a trend to rectify base pay discrepancies within a year, only a few seem to address broader compensation structures in a timely manner. This negligence can lead to non-compliance as the deadline draws near.

Sector Variations

Not all sectors are created equal in their approach to pay equity. Financial services dominate in implementing sound pay equity practices, including analyzing various compensation types and employing strategic methods to ensure compliance. On the other hand, companies in the healthcare sector lag significantly in addressing these issues.

Barriers to Progress

Despite the motivation to act on pay equity, several obstacles hinder progress. Most notably, 64% of organizations cite the perceived costs associated with rectifying pay disparities as a primary deterrent. Other barriers include achieving appropriate job classifications for analysis, managing line management discretion in pay decisions, and garnering support from senior leaders.

Organizational Responses

With compliance non-negotiable, organizations are focusing on reducing potential legal risks, fostering a culture of trust through transparency, and enhancing talent retention as key motivations for their pay equity initiatives. The directive emphasizes the principle of 'equal pay for equal work or work of equal value', mandating companies with 100 or more employees to demonstrate minimal pay disparities.

Conclusion

The EUPTD is fast approaching, and time is running out. As noted by Robert Sheen, CEO and Founder of Trusaic, organizations have just one annual salary review left before these regulations come into force. Over 50,000 companies must take immediate action to address compliance issues, or risk financial and reputational repercussions. The need for swift action in preparing for these significant changes in pay equity and transparency regulations is more critical than ever. Platform providers like Trusaic are stepping in to ensure businesses can navigate these complex waters successfully.

For more information on how organizations can prepare for the EUPTD and ensure compliance, visit Trusaic's website.