Key facts
- British businesses face compliance challenges due to the EU's new pay transparency laws.
- The EU directive requires companies with 250+ employees to publish pay reports from 2027.
- Asking candidates about salary history is banned under the new EU laws.
- Employers must disclose pay ranges before job interviews.
- The EU has reversed the burden of proof for pay discrimination cases.
- UK businesses with employees in the EU must comply with the directive.
British businesses are encountering difficulties in complying with the European Union's evolving pay transparency regulations, which are being rolled out in a fragmented manner across member states. The EU's Pay Transparency Directive, adopted in mid-2023, aims to ensure equal pay for equal work or work of equal value, particularly between men and women. It mandates that member states integrate these provisions into their national laws by June 7, 2026.
Key requirements of the directive include a ban on asking candidates about their salary history and the mandatory disclosure of salary or pay ranges before job interviews commence. From 2027, companies with 250 or more employees will be required to publish pay reports to demonstrate compliance. Furthermore, the directive reverses the burden of proof in pay discrimination cases, meaning companies must prove they have not discriminated if unjustified pay discrepancies of 5% or more are identified and not remedied within six months.
While the UK is not obligated to adopt the EU directive, UK-based companies with employees in the EU or EU subsidiaries must comply. Experts note that the UK's own employment laws are moving in a similar direction, with a greater emphasis on pay transparency. However, the UK's current system is described as narrower and more principle-based, relying primarily on gender-pay-gap reporting for larger employers and offering limited transparency rights. Employees can discuss pay but cannot request specific data, and employers are not required to disclose salary ranges in job postings or are banned from asking salary-history questions.
Despite the UK's current voluntary approach, some studies indicate a higher percentage of UK job listings include pay details compared to Germany and Italy. However, the upcoming EU laws are expected to alter these ratios. The demand for pay transparency is also driven by societal shifts, with younger generations openly discussing compensation and platforms like Glassdoor making pay data more accessible.