Most companies think the EU Pay Transparency Directive is about adding salary ranges to job ads, but it’s not where the real work sits. When we spoke to Nathan Keighley, who leads advisory work at Scede and is regularly brought in to untangle pay, levelling, and hiring issues inside fast-growing companies, he was blunt: the directive exposes whether a business actually understands how it pays people.
Because once salary ranges are public and pay discussions are allowed, every inconsistency becomes visible. Gaps need explaining, decisions need defending, and vague logic that used to pass no longer does.
Even if your HQ is outside the EU, hiring one person in a member state brings the directive into play. And it’s not partial compliance, the full set of rights applies to that EU-based employee, regardless of where the hiring manager sits.
What follows is the five-step plan Nathan uses to help companies get ahead of the directive, starting inside the organisation, then working outward.
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5 steps to prepare for the EU pay transparency directive
The EU Pay Transparency Directive is often explained as a long list of obligations, which can start to feel overwhelming.
That’s why we’ve taken a bunch of steps to simplify what’s otherwise a messy regulation. It boils down to five actions. Get them wrong and transparency reveals gaps you’re not ready to explain. Get it right, and the directive becomes far easier to handle.
The key is to start inside the organisation and then work outward.
Below is the five-step plan Nathan uses when advising companies on how to prepare:
Step 1: Conduct a “clean house” audit
You can’t be transparent if your data is messy. This is the part most companies try to rush, and it’s where problems show up first.
Before salary ranges appear in job ads or candidates start asking questions, employers need a clear view of how pay looks today. This means identifying gaps, understanding why they exist, and deciding which ones need fixing. Nathan describes this as internal hygiene.
At a practical level, this starts with a pay equity audit.
Companies need to identify differences that exceed the legal threshold, specifically, a 5% difference in the average pay level between female and male workers within the same category of work that cannot be justified by objective, gender-neutral factors.
This isn’t about any individual 5% gap. A 5% difference between two men isn’t a Directive issue. A 5% difference between the male average and female average in the same role category is where scrutiny begins.
If such a gap exists and cannot be objectively explained by factors such as performance, experience, or scope, the employer is required to carry out a Joint Pay Assessment with worker representatives. At that point, it moves beyond internal analysis and into a formal process.
You can see the problem here. Once that threshold is crossed, it becomes structured, visible, and harder to manage reactively.
As a result, this step is about fixing outliers before they become public issues. It’s far easier to correct pay quietly than to defend it after the fact.
The takeaway: Run a pay audit now, while you still control the timeline and the conversation.
Step 2: Standardise job architecture and levelling
This brings me to the next lesson: the directive cares about value.
One of the easiest mistakes companies make is assuming equal pay only applies to identical roles. The regulation goes further. It introduces the concept of “work of equal value,” which cuts across teams, functions, and departments.
To deal with that, organisations need a consistent way to define what “junior,” “mid,” or “senior” actually means. Without that, pay decisions become subjective fast.
In practice, this means building a job architecture. Levels need to be defined using objective criteria such as skill, responsibility, working conditions, and effort, and then applied consistently across the business. A project manager at a certain level should have a justifiable pay relationship with a software engineer at the same level, even though the roles are different.
This can be especially hard for startups and scaleups where speed has historically mattered more than structure. But this is also where most exposure sits.
As Nathan says, consistency is your best legal defence. If levelling is objective, pay decisions can be defended. If it isn’t, transparency quickly becomes uncomfortable.
The takeaway: If roles aren’t levelled consistently across the business, pay differences won’t stand up to scrutiny.
➡️Related reading: How to ensure effective calibration between recruiters and hiring managers
Step 3: Define and benchmark pay ranges
Once roles are levelled, money has to be attached to them. This is where many companies still rely on discretion, history, or negotiation.
However, the directive removes that safety net. Salary history is banned, and pay differences now need to be justified by the value of the role itself.
So instead, organisations need clearly defined ranges for every role and level. A minimum, a midpoint, and a maximum, benchmarked against real market data. Not last year’s rates. Not internal assumptions. Current market reality.
You can see the challenge. If your internal pay feels fair but your benchmarks are outdated, roles don’t attract candidates. If benchmarks exist but aren’t applied consistently, pay decisions look arbitrary.
Nathan’s advice is blunt: this is where companies move away from budget-led hiring. The range exists before the candidate appears. Negotiation happens within it, not outside it.
Done properly, this removes a lot of hidden bias. Two people delivering the same value no longer end up on different pay simply because one negotiated harder.
The takeaway: Define ranges early, benchmark them regularly, and stop letting negotiation decide pay outcomes.
➡️ Related reading: Compensation frameworks: 5 things we wish start-ups knew sooner
Step 4: Revamp the recruitment workflow
Salary ranges now need to be shared early in the process, often directly in the job description. “Competitive salary” is no longer an option, and asking candidates about salary history is banned.
That means recruitment workflows need attention. Job templates must be updated. ATS defaults checked. Recruiters trained on what they can and can’t ask. It sounds basic, but this is where accidental non-compliance tends to happen.
Meanwhile, there’s a practical upside that’s hard to ignore. In a market with more candidates and fewer roles, transparency filters faster. Misaligned applicants drop out earlier, and recruiters waste less time on conversations that were never going to convert.
Nathan describes this as an improvement in the user experience. Candidates know where they stand before they apply. Recruiters know they’re speaking to people within range. Which means late-stage drop-offs become less common.
The takeaway: Transparent job ads do more filtering than any screening call ever will.
➡️ Related reading: Compensation benchmarking: Here’s why a ‘competitive salary’ isn’t enough
Step 5: Enable managers for pay conversations
Once salary ranges exist and employees can discuss pay openly, questions become unavoidable. Why am I here in the range? Why is someone else higher? What do I need to do to move?
This is where most organisations struggle. Managers are rarely trained to talk about pay in a clear, objective way.
The Directive formally bans pay secrecy clauses that prevent employees from discussing their pay for the purpose of enforcing equal pay rights. Any existing contractual clauses that attempt to restrict those conversations will be legally void.
In the past, those clauses acted as a pressure valve. They reduced open comparison and delayed difficult conversations. That buffer is now gone.
Which means managers need to be able to explain decisions calmly, consistently, and with reference to objective criteria, not preference or precedent.
Without that, transparency creates frustration. With it, pay conversations become structured and predictable.
Of course, this is a retention risk. Employees don’t usually leave because of a number alone. They leave when the number can’t be explained.
The takeaway: Train managers before employees start comparing notes.
What this looks like in practice
Even when audits are done, roles are levelled, and ranges are defined, the real test comes when you put things into practice.
We’re already seeing companies advertise fewer roles quarter on quarter, while candidate numbers continue to rise. In that environment, salary clarity does two things at once. It filters out misaligned applicants early, and it attracts candidates who already understand the value of the role.
Nathan sees this play out most clearly in hiring efficiency. Recruiters spend less time explaining pay. Candidates drop out earlier if the range doesn’t work. And late-stage offer rejections become less common because expectations were set from the start.
Internally, clear ranges reduce ad-hoc pay decisions, regular benchmarking keeps roles competitive without surprise corrections, and managers have much better structured conversations.
Where Scede fits in
The EU Pay Transparency Directive impacts recruitment, people operations, managers, and leadership. Most companies struggle to align all these moving parts. That is precisely where Scede steps in.
We focus on the foundational work essential for true pay transparency:
- Structure: Developing clear job architecture, levelling, and pay frameworks. This ensures pay decisions are based on objective criteria, making them easy to explain and defend.
- Practice: Benchmarking roles, defining defensible salary ranges, and pressure-testing how new hires integrate with existing teams.
- Compliance: Updating recruitment workflows (including job templates, ATS defaults, and training) to avoid accidental non-compliance.
- Enablement: Training managers to have objective, data-driven conversations about pay, progression, and positioning within salary ranges.
Essentially, Scede can help companies ensure all internal pieces are aligned and ready for the transparency the Directive demands.
Final thought
The EU Pay Transparency Directive removes a lot of wiggle room. Once ranges exist and pay discussions are allowed, transparency isn’t informal anymore.
Employees also have a formal right to request information on the average pay levels of workers doing the same work (or work of equal value) broken down by sex. That moves pay conversations from anecdotal comparison to structured data.
At that point, inconsistencies aren’t rumours. They’re numbers.
The companies that cope best are the ones doing the groundwork now before those conversations happen in public or under pressure.
If you’re keen to get some help with this, let’s talk. We’d genuinely love to help.
Want more insights on scaling your talent acquisition? Follow Scede on LinkedIn for strategies that actually work.
EU Pay Transparency Directive: FAQs
When does the EU Pay Transparency Directive come into force?
The Directive must be transposed into national law by 7 June 2026. From that point, Member States will begin enforcing its requirements.
For pay gap reporting, large companies with 250+ employees must report by 7 June 2027, using 2026 data. Companies with 150–249 employees also report in 2027, and then every three years thereafter. Implementation details may vary slightly by country, but the reporting timelines are already set at EU level.
Do employers have to include salary ranges in job adverts?
The Directive requires employers to provide pay information in a way that enables informed and transparent negotiation. That means the salary range must be shared either in the published job vacancy notice or, at the latest, prior to the interview.
Waiting until the final offer stage would not meet that requirement.
Many companies are choosing to include ranges directly in job ads to avoid misalignment and wasted time later in the process.
Can employers still ask candidates about their salary expectations?
Yes. Asking about salary history is prohibited. Asking about expectations is still allowed, provided it’s handled within the defined range for the role.
What does “work of equal value” actually mean?
It goes beyond identical job titles. Employers must assess value based on skill, responsibility, working conditions, and effort — even across different roles and departments.
Who carries the burden of proof if a pay gap is challenged?
The employer.
Pay differences must be justified using objective, gender-neutral criteria. If challenged, the employer is responsible for demonstrating that any gap is not discriminatory.
Importantly, if the employer has failed to comply with its transparency obligations under the Directive, the burden of proof shifts to them automatically in most court proceedings. That makes compliance more than a reporting exercise — it directly affects legal exposure.
Explanations may also need to be shared internally, and in some cases with regulators or worker representatives.
Is this mainly an HR issue?
No. It affects recruitment, managers, leadership teams, and internal governance. HR can’t solve it alone.