Reward leaders and the EU pay transparency directive: a shared challenge across Europe

Last week, I hosted a roundtable dinner in Amsterdam with a group of reward leaders from a variety of different businesses. The focus was the upcoming EU Pay Transparency Directive, a topic that is front of mind for every organisation operating in the region.

The directive, which comes into force on 7 June 2026, is a major initiative from the European Commission and European Parliament. It aims to reinforce the principle of equal pay for equal work and work of equal value. The goal is to close gender pay gaps and eliminate pay discrimination by increasing transparency and accountability in pay practices.

Key elements of the directive include:

• Transparent pay levels in job advertisements
• The right for employees to request average pay data for roles of equal value
• Mandatory gender pay gap reporting and pay assessment for companies with over 150 employees
• Pay audits and action plans where disparities exceed 5%
• A shift in the burden of proof to employers in cases of suspected pay discrimination

The directive also requires the use of gender-neutral criteria in pay structures and prohibits questions about salary history during the recruitment process. While the goals are clear, the path to achieving them (from preparation to implementation) is complex. Each member state must transpose the directive into national law, which introduces variation and uncertainty across the European Union. Additionally, the directive itself does not outline concrete approaches, leaving room for organisations to interpret and adapt it based on national considerations.

Our roundtable brought together leaders from Dutch, European and global organisations. It was a small, intimate group, which allowed for open and honest discussion. No one had all the answers, and that was exactly the point. Everyone is navigating the same ambiguity and challenges. There is no clear benchmark for what the gold standard looks like; not until the directive takes effect and data can be collected and analysed across the EU.

Ahead of the event, we asked attendees to share the topics they most wanted to explore. Three key themes emerged:

Strategic implementation, best practices and operational readiness

This theme focused on how to prepare internally. Across the rewards industry, organisations are reviewing their pay structures, job architecture and total rewards strategies. Some are investing in benchmarking tools and data collection to ensure their pay levels are competitive and equitable. Others are working to align internal stakeholders around a shared approach to transparent pay. Regardless of where they are in their implementation journey, all organisations are having to dig deeper and create a plan.

Around the roundtable, there was a strong emphasis on readiness, not just for the sake of compliance, but for achieving what the directive is intended to accomplish. Clear, consistent pay practices were discussed as a way to support organisational growth and cohesion. Attendees also reflected on how pay disparities have negatively impacted retention, societal progression and broader DEI goals.

Legal, regulatory and global considerations

The legal and regulatory aspects of implementing the directive are, understandably, top of mind. For multinational organisations, the legal landscape is especially complex. The directive applies across the European Union, but each country (from France to the Netherlands) will interpret and enforce it differently. This means global reward teams must balance consistency with local compliance.

We explored how to align global pay strategies with national law, how to manage cross-border challenges and how to prepare proactively for potential sanctions in cases of non-compliance. The role of employee representatives in shaping and reviewing pay policies was also highlighted as a key consideration.

Communication internally and externally

Perhaps the most nuanced theme was communication. From a high-level perspective, how do you talk about pay in a way that is transparent, fair and constructive? How do you prepare managers to have these conversations? How do you respond to employees asking about their own pay compared to others within their job grade? And how do you ensure that messaging is consistent across regions?

Attendees shared ideas including manager training, internal campaigns and peer alignment. There was also discussion about how to communicate externally (particularly in job advertisements) and how this will impact the recruitment process. Talent acquisition teams and external recruitment partners will need to adapt to ensure alignment with transparent pay expectations.

What stood out most from the evening was the willingness of leaders to be vulnerable. No one claimed to have it all figured out. Instead, there was a shared sense of learning, collaboration and openness. Attendees shared their perspectives and challenges, asked each other questions and debated key topics.

We closed the evening with a simple but powerful takeaway: there is no perfect approach. The directive is both simple and complex, and every organisation is at a different stage. But we are all in this together.

We will be hosting a follow-up session in three months, this time virtually, to see how things are progressing. If you are working in reward and grappling with the implications of pay transparency legislation, you are not alone. Let’s keep the conversation going.