Pay Transparency

Pay Transparency

Pay Transparency: A Regulatory, Strategic, and Human Challenge

Pay transparency has become a defining issue for organisations today. Driven by the European Pay Transparency Directive, it is fundamentally reshaping payroll practices, compensation management, salary structures, remuneration frameworks, and HR governance. This approach directly supports pay equity, equal pay, and the fight against pay discrimination, while strengthening internal pay transparency and meeting the growing demands of pay transparency standards.

Beyond regulatory compliance, pay transparency is a lever for social performance, employer attractiveness, managerial trust, and better-informed decision-making. It calls into question payroll data, HR processes, decision-making frameworks, compensation policies, the impact on pay gaps, and an organisation's ability to explain, justify, and manage its compensation choices, particularly through clear salary structures and published pay ranges.

Our pay transparency advisory services are built on a progressive, operational, and risk-managed approach, designed to adapt to the maturity level and specific challenges of each organisation, while supporting the implementation of the obligations introduced by the European Pay Transparency Directive.

Making pay transparency a driver of trust, performance, and social dialogue.


View the BROCHURE (in french)


The Regulatory Framework: What the European Pay Transparency Directive Requires

European Directive 2023/970 on pay transparency applies to all organisations, in both the public and private sectors. Member States must transpose it into national law by 7 June 2026. The Directive introduces stronger requirements to promote greater pay equality and reduce unjustified pay gaps.

Obligations then apply in two ways:

  • obligations applicable to all organisations,
  • phased obligations based on company size.

Obligations Applicable to All Organisations

Transparency from the Recruitment Stage

Pay transparency applies from the very first stage of recruitment:

  • Employers must indicate the offered salary, or at minimum a salary range in job postings, before the first interview. This includes removing vague references such as "depending on profile" or "depending on experience."
  • Employees and/or candidates have the right to request information on the collective agreements applied by the employer in relation to the position concerned
  • Employers are prohibited from asking candidates about their salary history.
  • Employers must ensure that job postings and job titles are gender-neutral and free from pay discrimination.

Transparency After Recruitment

Employers will be required to strengthen internal communication:

  • Employers must make available to employees the objective, gender-neutral criteria used to determine pay, pay levels, and pay progression (an exemption may apply for organisations with fewer than 50 employees on this last point).
  • Employees will have the right to request, in writing, information on their individual pay level and on average pay levels, broken down by gender and by category of workers performing the same work or work of equal value.
  • Employers must inform employees of the existence of this once a year. Requested information must be providedwithin a reasonable timeframe, and in any event within two months of the request.

Reporting Obligations Based on Company Size

The European Directive introduces a structured reporting framework to ensure greater pay transparency.

While the level of obligation varies according to company size, organisations are required to produce and communicate a set of key indicators to objectively assess pay gaps and ensure regular monitoring.

The sections below detail both the information to be collected and the consequences associated with these reporting obligations.

  1. the gender pay gap;
  2. the gender pay gap for variable or complementary pay components;
  3. the median gender pay gap;
  4. the median gender pay gap for variable or complementary pay components;
  5. the proportion of female and male workers receiving variable or complementary pay components;
  6. the proportion of female and male workers in each pay quartile;
  7. the gender pay gap by worker category, broken down by base salary and variable or complementary pay components.
Companies
250+ employees
Companies
150–249 employees
Companies
100–149 employees
Companies
under 100 employees
First report by 7 June 2027 Then annually (previous calendar year)
First report by 7 June 2027 Then every 3 years (previous calendar year)
First report by 7 June 2031 Then every 3 years (previous calendar year)
No formal obligation at this stage Possible extension by Member States Exemption possible for organisations with 

In addition to these size-differentiated reporting obligations, several cross-cutting requirements apply to all organisations.

The information collected must be submitted to the "monitoring body" designated by each Member State to ensure compliance with and enforcement of pay transparency rules.

It must also be communicated to employees and employee representatives, in particular the detailed data referred to in point 7, ensuring direct access to information on pay gaps.

Upon request, the same information must be made available to labour inspectorates and equal treatment bodies, covering up to the four preceding years where available.

Finally, employers retain the option to publish the information referred to in points 1 to 6 on their website or to make it publicly available through any other appropriate means.

A joint pay assessment must be carried out by the employer, in cooperation with employee representatives, if three conditions are met:

  • the reporting reveals an average pay gap of more than 5% between women and men;
  • the employer has not justified this gap on the basis of objective, gender-neutral criteria;
  • the employer has not remedied the gap within six months of the reporting date.

For reference, this joint assessment will cover the following elements:

  • an analysis of the proportion of female and male workers within each worker category;
  • information on average pay levels for female and male workers, and on variable or complementary pay components, for each worker category;
  • all differences in average pay levels between female and male workers for each worker category;
  • the reasons for these differences in average pay levels, based on objective, gender-neutral criteria where applicable, as jointly determined by employee representatives and the employer;
  • the proportion of female and male workers who received a pay increase upon returning from maternity, paternity, parental, or carer's leave, where such an increase occurred in the relevant worker category during the period of leave;
  • measures to address pay differences that are not justified by objective, gender-neutral criteria;
  • an assessment of the effectiveness of measures resulting from previous joint pay assessments.

Beyond the timelines, the Directive makes pay transparency a matter of governance and management: it places lasting responsibility for senior leadership, HR, and managers to manage, explain, and take ownership of compensation decisions, in close connection with social dialogue.

 

Why Commit to a Pay Transparency Approach?

Embarking on a pay transparency initiative is not simply about meeting a regulatory requirement. Above all, it is a driver of lasting value creation for the organisation.

Key Benefits for the Organisation

    • Strengthen attractiveness and employer brand: clear and equitable pay practices build trust among candidates and employees alike.
    • Retain talent by bringing coherence and meaning to compensation decisions.
    • Secure managerial decision-making through clear, shared, and explainable pay rules.
    • Reduce social and legal risks associated with unmanaged pay gaps.
    • Improve the quality of social dialogue and strengthen the credibility of negotiations.
    • Manage payroll more strategically, drawing on reliable data and robust processes.

Pay transparency thus transforms pay and compensation into management tools that serve both economic and social performance.


Our Advisory Services

BDO offers a structured advisory framework built around three areas of intervention, which are modular and independent. Each organisation can activate the most relevant levers, in the order and according to the priorities that best suit its needs.

Understand and Align
Education and Training

Build a shared understanding of pay transparency challenges and align all key stakeholders (HR, senior leadership, finance, and managers).

Diagnose and Engage
Data, Processes, and Management

Establish an objective picture of the organisation's actual situation based on payroll data, HR processes, and management practices, in order to identify priorities and areas of risk.

Act
Tailored Advisory Support

Deploy targeted actions to correct, secure, and embed pay transparency in the organisation on a lasting basis.

Why BDO?

Integrated, multidisciplinary expertise: HR consulting, compensation, payroll, data, and employment law.

Operational mastery of payroll and compensation structures as a foundation for credibility.

Distinctive management support: we help managers understand, explain, and take ownership of pay transparency decisions, reducing tensions and securing employment relations.

Deep expertise in change management, at the heart of pay transparency projects.

A pragmatic, progressive approach, compatible with ongoing business operations.

The ability to intervene across the full spectrum from education to operational deployment or on a fully tailored basis.

Your Key Contacts

Emilie Ducorps-Prouvost - Attorney at law

Emilie Ducorps-Prouvost

Attorney at law - Partner - Specialized in Employment law
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Benoit Rocher

Benoit Rocher

Partner, Business Transformation
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Xavier Bontoux

Xavier Bontoux

Attorney at law - Partner - Specialized in Employment law
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Nicolas Latournerie - Attorney at law

Nicolas Latournerie

Attorney at law - Partner - Specialized in Employment law
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Actualité - Transparence salariale