Pay transparency is reshaping how organisations approach compensation. The practice is not only a growing regulatory concern but also a strategic tool for recruitment and retention
The majority of European companies are gearing up to increase pay transparency, with 69% driven by new regulations according to WTW's 2024 Pay Transparency Survey. Company values (52%) and rising employee expectations (47%) are also pushing employers to share more about how salaries are determined. As transparency becomes a key focus HR leaders must prepare to meet the demand for open pay practices.
What is pay transparency?
At its heart pay transparency means openness about how pay is determined, shared and discussed within an organisation. This can include disclosing salary ranges for specific roles, explaining the factors that influence pay decisions (such as experience, performance and market rates) and providing employees with information about how their pay compares to others doing similar work.
The benefits of pay transparency extend beyond compliance:
- It builds trust between employers and employees
- It helps organisations attract talent by aligning with job seekers’ expectations
- It promotes fairness, particularly in addressing issues like the gender pay gap
By implementing transparent pay practices, companies can foster a more equitable and supportive workplace, where employees feel confident that their contributions are recognised and rewarded fairly.
The People Space explores how pay transparency is transforming the future of work and what HR leaders should do to stay ahead of the curve.
- Regulatory push: the EU Pay Transparency Directive
Regulatory pressure is one of the main forces driving pay transparency across Europe. According to another survey by global advisory, broking and solutions company WTW on the EU Pay Transparency Directive 44% of employers are already preparing for the EU Pay Transparency Directive which comes into force in 2026. This directive will require companies to provide employees with detailed information about their own pay as well as the pay of their peers, enforcing transparency around equal and gender pay.
Eva Jesmiatka, pay & career equity lead at WTW, emphasises the importance of acting early: "It’s important that employers put steps into motion to address any pay transparency challenges as soon as possible. Conducting a readiness check... can be used to build a roadmap and an approach to communications in line with the desired employee experience."
With challenges around data reporting, job levelling and ensuring that pay policies are robust and objective HR professionals with EU employees must prepare now to ensure their compensation practices are compliant and transparent before the 2026 deadline.
2. Pay transparency and gender equality
While Europe is moving forward with pay transparency laws recent setbacks in the UK highlight the ongoing battle for gender pay equity. On International Women’s Day 2022 the UK Government Equalities Office launched a pilot programme to promote pay transparency in job adverts, aiming to reduce gender pay disparities. The pilot required employers to list salary details and refrain from asking applicants about their salary history, methods to promote fairness in negotiations.
However, despite positive results the government abandoned the pilot in 2024, raising concerns about its commitment to gender pay equity.
Dean Sadler, CEO of Tribepad, a vocal advocate for pay transparency, expressed disappointment in the decision: "The decision to halt the pilot is profoundly disappointing. The pilot represented a tangible step towards addressing systemic pay disparities that disadvantage women. By requiring salary details in job adverts and eliminating the practice of basing salary offers on previous pay, the pilot could have set a new standard for fair pay practices across the UK."
Sadler and other advocates continue to encourage employers to adopt voluntary pay transparency practices to ensure fairness. A workingmums.co.uk poll of pay transparency indicated that 74% of working mothers would avoid applying for jobs without stated salaries, highlighting the importance of transparency in attracting female talent and reducing gender pay gaps.
- Building a culture of trust
Pay transparency is not just about regulation but is increasingly seen as a reflection of an organisation’s values. Over half (52%) of the respondents in WTW's survey cited company culture as a reason for adopting pay transparency practices. Employees today demand more than just a fair wage, they want to feel valued, engaged and confident that their employer operates with integrity.
In response to research from KPMG and the Recruitment and Employment Confederation (REC) Derek Mackenzie, CEO of recruiter Investigo, highlights the evolving expectations of today’s workforce: "Pay is always going to be a driving factor for every member of staff so it's important for businesses to understand the impact of starting salaries and pay rises as well as aspects such as pay transparency in job descriptions when looking to recruit and retain staff. But there is more to a role than pay alone. Increasingly, staff want to feel valued and have a sense of purpose in their work."
HR leaders can build trust and engagement by ensuring not only that pay practices are transparent but also by offering a holistic employee experience that includes flexible work policies, career development opportunities and a supportive, inclusive culture.
4. Recruitment and retention: why transparency matters
The WTW survey found that two-thirds (65%) of European organisations are already sharing, or considering sharing, pay ranges with all job candidates in locations, whether or not required by local regulations. In an increasingly competitive talent market being upfront about compensation can make all the difference in attracting the best talent.
However, in the UK salary transparency hit rock bottom in July, according to job search engine Adzuna . The proportion of job adverts with salaries fell to 46.3% in July, the lowest recorded figure since the company started tracking this metric in 2016. Over half (52.3%) of job adverts do not include any salary information.
Job seekers expect transparency, with many viewing salary secrecy as a red flag. This is especially true in today’s job market where issues of fairness and transparency are top of mind for candidates.
5. The role of total rewards in transparency
A December 2023 Gartner survey of 113 HR leaders found total rewards to be a top four priority for HR as issues around pay transparency, legislation and an increasingly fractured employee-employer relationship continue to keep total rewards initiatives in the spotlight.
A 4Q23 Gartner survey of more than 18,000 global employees found that employees consistently cite compensation as their number one reason to accept or leave a job. Hanne Nieberg, director in Gartner’s HR practice, says: “Over the next two years pay transparency legislation will rapidly take effect, which will require HR leaders to invest in employee recognition programmes and rewards communication to ensure pay equity and to comply with new legal requirements.”
The bigger picture: what’s next for HR?
As WTW’s research and external insights reveal the move towards pay transparency is not just a regulatory necessity. Pay transparency can be a strategic advantage for forward-thinking organisations. While some regions, like the EU, are moving ahead with ambitious legislative reforms, others, like the UK, are experiencing setbacks. Yet the message from employees is that transparency is the future of fair pay.
For HR leaders the path forward involves embedding transparency into the very fabric of your organisation’s culture. Whether through total rewards, open communication or voluntary transparency initiatives, the organisations that embrace this shift will be the ones that attract, retain and engage the best talent.