Employers in the UK with operations in Europe will be paying close attention to the new EU Pay Transparency Directive, which has just come into force. But what does it mean for how they provide benefits? Yanick Chainey explains

The deadline to implement the EU Pay Transparency Directive (EUPTD) into national law came and went on 7 June 2026, increasing HR’s responsibility to report on pay equity.

Transparency is very much the theme here: more clarity for candidates on the remuneration they can expect for a role; more data made readily available to employees, including the criteria which determine their remuneration; and regular reporting to government oversight bodies.

The oversight itself can compel companies to address gaps within a certain timeframe, and potentially impose penalties if they fail to do so.

Any companies with more than 100 employees in an EU country will be subject to the new rules, which include detailed requirements on data collection and reporting.

It’s also worth noting that “pay”, as it’s described in the EU’s directive, includes all forms of remuneration: salary, allowances and benefits.

And it’s that last facet, with its legacy of complexity, its dispersal across vendors and brokers, which presents perhaps the biggest risk of non-compliance.

Broadly, the role of benefits has been underplayed in this conversation, but it can account for a significant slice of an employee’s overall package.

Pensions, healthcare, allowances…they all add up, they’re held by different vendors, and they’re all subject to renewal or renegotiation. Benefits may not be the biggest piece, but they’re the most complex.

Data and openness

So: more measurement and more reporting. But the data burden isn’t just about satisfying regulatory bodies.

Employees are also given new rights to request pay and benefits information, including average remuneration levels based on colleagues doing comparable work. Businesses affected by the directive can expect a substantial increase in data requests but, for many organisations, this is an opportunity as much as it is an obstacle.

With a single and consistent tech and data foundation which can serve all the organisation’s territories, while allowing local teams to navigate the requirements specific to their country, HR gains the ability to deliver what’s needed right now and the infrastructure to cope with what seems inevitable: more detailed and complex requirements in the years to come.

The benefits challenge

But while pay (including bonuses and options packages) boils down to a single number, employee benefits tend to be offered with a breadth and profusion which adds an extra layer of complexity.

They are often calculated in different ways from country to country, and by type of benefit, taking into account local legislation and requirements.

Specific fees and renewal rates will vary, making the broader context of value for money and value to the employee harder to ascertain. And they’ll inevitably be spread across years of documents, or hidden in emails and attachments, making them incredibly challenging to surface, collate and distill into a single source of knowledge.

The key, then, is in finding that knowledge – the system of record on which you can rely absolutely.

Once you have faith in your benefits data, it’s much easier to make an informed decision about what to include or not include when reporting across territories (an important topic when you bear in mind that each EU member state will have its own interpretation of what constitutes “pay”).

Reliable data offers a much stronger starting point from which to do your planning. And that’s vital, because there are plenty of tough questions to ask yourself in this process. How clearly do you currently define worker categories? Are your systems even set up to incorporate your benefits offering, ensuring that all rewards are calculated?

For that matter, do you have a clear set of criteria for how employees qualify for benefits, and are those criteria applied consistently and without gender bias? How much of this can be automated, and how will you manage compliance if some countries implement the full directive, while others adapt their own national laws to reflect all or some of it?

Sweden, to take an example, already has some of the world’s most stringent legislation for preventing gender bias in the workplace, but has expressed concerns about how the directive may affect the country’s long history of using kollektivavtal (a collective bargaining agreement) to negotiate remuneration.

The proposed Swedish postponement of the EUPTD is the sort of local complexity that multinational businesses will need to navigate.

Setting a new bar

The EU’s drive towards equality and clarity in the workplace is admirable. Even the more simple aspects of the directive – such as prohibiting the use of salary secrecy clauses in employment contracts – are strong statements of intent.

But the real question for businesses is whether they have faith in their data. A single, reliable source of truth that empowers HR and benefits leaders to generate reports (or responses to employee self-service HR tools) quickly and easily; to identify historical anomalies or spot examples where promotions or changes to rewards packages have been applied inconsistently; to offer clear communications to the employees who, let’s not forget, are negotiating this change too.

We live in an era where this is easier to do than ever before. The advent of AI-native data analytics allows us to parse information at a speed and accuracy that belies its complexity – even for a labyrinthine world such as benefits, where information sits across PDFs, old spreadsheets and email chains.

Yes, the onus is on the employers to prove that they’re doing the hard work. But the EUPTD also presents an opportunity to increase transparency, and at the same time gain a forensic view of the systems which document reward – systems which may not have been looked at closely for years.

After all, we’re talking about people costs – a major item on the balance sheet. The EU wants a closer look, but looking closer will almost certainly benefit business too.

 

Reward, compensation and benefits opportunities

Browse all comp and benefits jobs

The post What does the EU Pay Transparency Directive mean for benefits compliance? appeared first on Personnel Today.

Source: www.personneltoday.com

Employment News