Tackling the Pay Transparency Challenge 

Understanding your job data is key to pay transparency compliance

With legislation on the rise across many countries, now is the time for organisations to get on the front foot when it comes to pay transparency, but when faced with the challenge of dealing with complex organisational structures, it can be a daunting task.

There are a lot of moving parts for any large organisation when it comes to compliance. It's not just about keeping up with legislative changes but also putting in place robust and agile job data structures, mechanisms and processes to enable effective global compliance, whilst managing the nuances of regional variations.

“The pay transparency movement will continue to spread through regulation, but also through changing workforce expectations. We’re in an environment where employees are rightly demanding fairness, clarity and transparency in how they are paid.” Aon

Pay Transparency in the US

There are now 10 US states with pay transparency legislation in place, with a further thirteen in the process of making it law.

Using the state of California as an example, all employers, with 15 or more employees, must include the pay scale for a position in any job posting. They must also maintain records of a job title and wage rate history for each employee for the duration of employment plus three years. 

26% of the US labour force is covered by pay transparency laws, that's over 44 million people

In addition, there are requirements for pay gap reporting, a ban on asking job applicants about their salary histories and relying on an applicant's salary history to determine compensation levels.

EU Pay Transparency Directive

In 2023, the EU Parliament voted to adopt a Directive. This is in a drive to close the gender pay gap of around 13%. EU Member States have until June 2026 to transpose the Directive into national law.

The Directive also makes pay gap reporting mandatory for organisations over a certain size; it also goes one step further, requiring organisations to look at deeper analysis and establish a corrective action plan where there is a pay gap of more than 5%.

Job applicants will have the right to receive information on the initial pay level/range for any advertised position and employers cannot ask about previous or current pay.

Pay Transparency in the UK

The EU Directive won’t directly apply in the UK. However, if a company is registered in the UK, or anywhere else non-EU, but has more than 100 employees based in EU member states, they will need to comply with the legislation and reporting requirements for that location.

The UK also has its own gender pay gap reporting process for organisations with more than 250 employees.

Overcoming pay transparency challenges

At the very core of pay transparency, and pay fairness, is job data. Having the job data for your whole organisation mapped within a well-structured job architecture, with a consistent levelling framework across job families, will give you the ability to look across your landscape of jobs, pay and reward, in order to make comparisons between similar roles and ensure equal pay for equal work.

However, for some companies job data can be chaotic, inconsistent and unstructured. It can exist as a long list of job titles and associated job codes that have developed organically as the organisation has grown, changed, merged or acquired. Where an organisation does have a job structure in place, it can easily become difficult to govern and manage and therefore out-of-date.

In both scenarios, there can be a state of chaos – hundreds of job titles, many just slight variations of others; job levels all over the place; and inconsistencies in salary ranges across roles, business areas and regions. A disordered job structure creates a shaky foundation, which makes compliance with pay transparency legislation difficult.

From a Job data perspective, it’s never been more important to get your house in order. Regaining control through a dynamic Job Architecture, and structured frameworks through Job Families, will give greater transparency and control over pay and grading.

Although legislative requirements may differ in each location, fundamentally, they have one overall aim in common; achieving equal pay for equal work for employees from under-represented groups.