Fewer than half of UK headquartered businesses are ready to meet the requirements of the European Union Pay Transparency directive, which comes into force within EU countries in June 2026 – just two pay cycles away.
Professional services firm Aon’s pay transparency study of more than 200 businesses found that only 9% of respondents stated that they were “ready” for pay transparency.
Many larger firms based in the UK will be affected by the directive despite the UK not being in the EU.
Half (51%) were “getting ready”, with 40% of all businesses stating they were not ready. Only 38% of businesses told researchers their HR teams are fully aware of the requirements and only 3% confirmed that all staff in their business had been made aware of the requirements.
The study supports findings published in June by a think tank indicating a lack of readiness among large firms based in EU countries.
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The EU directive calls on employers to conduct thorough assessments of their compensation – including in-kind benefits, basic pay, bonuses and other incentive pay – and report their results publicly, provide salary transparency to job candidates, and comply with several enforcement mechanisms.
Workplaces will have to refine their job architecture to be able to categorise employees who are performing the same work or work of equal value, and to ensure discriminatory talent management decisions are transparent and remedied.
Once fully in effect, all employers with 100 or more employees must provide detailed information related to the gender pay gap to employees, employee representatives, local authorities responsible for gathering and publishing the data, and publish this data on their website.
Employers will be required to communicate salary ranges or starting salaries of all advertised positions to job seekers and will be prohibited from asking applicants about their salary history. This practice is considered to have long disadvantaged women and candidates from marginalised groups and has widened gender and racial gaps in lifetime earnings.
Anthony Poole, partner in Talent Solutions at Aon, said: “The UK may no longer be within the EU, but this is a situation where many UK-based companies are still very much affected and influenced by EU legislation. This is particularly so for the many businesses with operations in the EU. While many companies are realising that they cannot ignore the change this wave of legislation is bringing, our study shows that few have measures or planning in place to deal with it.”
Poole added that many companies globally were reporting changing attitudes and expectations of greater pay transparency among employees and job candidates and said that “embracing a pay disclosure strategy can bring benefits in attracting and retaining talent.”
He said that given the extent of the cultural shift involved in implementing the directive’s requirements, it was not surprising that UK companies were hesitant. But, he said: “Just making a start on the process is vital to enable critical decisions to be made and for all stakeholders to be comfortable with the changes and their effects.”
Aon’s tips for companies preparing for pay transparency include assessing level of readiness, analysing current structures and pay gap, aligning pay transparency with total reward philosophy and educating stakeholders.
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