Embracing Salary Transparency: A New Era for Leadership and Equality in Europe

With the introduction of the EU Pay Transparency Directive, the European Union is pushing forward a landmark initiative to close the gender pay gap. This directive mandates companies across EU member states to embrace salary transparency, ensuring that employees have access to essential pay-related information.

For senior leaders and executives, this presents both a responsibility and an opportunity to build trust, promote fairness, and take the lead in creating a more equitable workplace.  

1. New Requirements for Transparency and Accountability 

From July 2026, businesses across the EU will be required to publish detailed reports outlining salary discrepancies between men and women. Organisations with over 250 employees must submit annual salary pay gap reports to the relevant national authorities, while smaller organisations will be reporting every three years.

To address pay inequities head-on, the directive also reduced the disparity threshold to 5%, significantly stricter than the previous 25% allowance.  

This shift means that companies, and particularly their senior leaders, will need to actively monitor, report, and address pay gaps within their teams. It compels companies to be clear about their pay structures and decision-making criteria, setting a high bar for transparency across the board. 

Raphael Asseo states:

Salary transparency, especially within organisations, can be a powerful tool for promoting fairness and closing gaps, particularly in addressing gender pay gaps. Internally, it fosters trust and fairness by aligning compensation with roles and responsibilities, while reducing discrepancies that generate frustration among employees. However, external transparency must be approached cautiously, as overly rigid structures can limit cross-sector mobility and risk labeling talent.

True equity goes beyond just pay—it involves addressing the structural hierarchies within companies. Some organisations adopt rotation roles, where employees take on managerial responsibilities temporarily. This approach values contributions across all levels equally, introducing a dynamic way of assessing value and emphasising teamwork over rigid hierarchies.

We also need to acknowledge that companies with flatter hierarchies—say, four layers or fewer—tend to see smaller gaps between salaries, as everyone is more hands-on. Every piece of a company counts and aligning pay schemes more closely to contributions rather than titles can bridge the gap further.

Salary transparency can certainly build trust, but it should always be paired with efforts to foster inclusive structures that reduce unnecessary pay disparities and create a balanced, equitable environment for all.

Raphael Asseo
Senior partner at Page Executive in Switzerland
Global Head of Finance Pratice

This is not the first time that salary transparency has been subject of ruling in Europe. Raphael Asseo, Senior Partner at Page Executive in Switzerland, refers that 

A notable example of addressing pay inequality in Switzerland was the initiative 1:12 – Pour des salaires équitables, which proposed that the highest salary in a company could not exceed twelve times the lowest salary. Although the initiative was rejected by referendum in 2013, it sparked significant debate about the growing disparities between the highest earners and the rest of the workforce. It highlighted the importance of considering systemic measures to align pay scales more equitably.

Whilst that proposal may have been unsuccessful, there can be no doubt that the new legislation around salary transparency is creating significant change. 

Lorena Gutierrez reflects on the broader implications of transparency: 

What does it mean to become an open book, salary-wise? Does it foster healthy competition and fair retribution, or does it introduce new challenges? In some ecosystems, we need to balance transparency with flexibility to reward exceptional talent without rigid constraints. For example, in France, the government suggests limiting CEO salaries to a certain multiple of the lowest salary, but the reality within companies often involves complex hierarchies with many levels that defy one-size-fits-all rules. 

Lorena Gutierrez
Partner at Page Executive France
Global Head of the Human Resources Practice

2. Increased Empowerment for Employees 

The changes will undoubtedly have a positive impact on employees. Under the new law, employees gain the right to view average pay levels by gender and job category and understand the criteria for salary progression and career advancement. By ensuring that these criteria are objective and free of bias, the directive can help level the playing field.

This also changes how companies approach recruitment. Employers can no longer ask candidates about previous salaries, helping to prevent past pay inequities from affecting future offers. Furthermore, companies must include salary ranges or minimum pay information in job listings or during initial interviews. This move can strengthen trust, enhancing talent’s confidence in the company’s commitment to fairness.  

Our recent Talent Trends 2024 report underscores this: 64% of job seekers consider salary among the top three pieces of information in job descriptions, with 26% ranking it as their highest priority. 

Lorena Gutierrez underscores the importance of understanding the nuances behind pay disparities: 

It is not only a matter of gender equity, but a broader reflection concerning professions, career paths, the weight of education, industries, and culture. For instance, finance traditionally commands higher salaries than HR,  reflecting a CEO’s perception of the strategic value of each position. Transparency will have a strong cultural impact, especially in countries like France, where people are often shy about discussing figures.

And shares a real-world example of how pay equity is often overlooked, even at the executive level: 

During a recruitment process, a female HR Director candidate stated, 'I want to be paid as much as the other members of the Executive Committee.' She was the only candidate to state this expectation in the whole interviews process. It was a smart move, as HR is often perceived as less strategic compared to, for example, finance or operations. Of course, it can also be analyzed through a gender approach.

3. Implications for Leadership: Transforming Organisational Culture 

For senior leaders, implementing these changes requires more than just meeting regulatory standards; it requires a cultural shift within organisations toward ethical and transparent business practices. Leaders now have an opportunity to reevaluate pay structures, foster open dialogue, and implement modern tools to track and report pay differences accurately.

According to Page Executive’s Talent Trends 2024: Leadership Edition, 29% of surveyed leaders already consider closing the gender pay gap a top five priority within their diversity, equity, and inclusion (DEI) efforts. Moreover, 32% of leaders expressed dissatisfaction with their own salary levels, and an overwhelming 77% rated competitive compensation as one of their top five work-related priorities.

These figures indicate that salary transparency is a growing concern at all organisational levels, and the directive presents a timely opportunity for leaders to address these issues head-on.

Simonetta Saprio gives us some insights about the sector’s reality when it comes to pay equity and transparency: 

In Healthcare and Life Sciences, salary equity has become a central focus within broader diversity and inclusion strategies, addressing gaps often seen in specialised roles and research fields. Organisations are increasingly conducting pay audits and leveraging data analytics to ensure fairness, especially given the high demand for unique skills in areas like genomics and bioinformatics. Regulatory pressures around pay transparency are also pushing firms to take active steps to correct disparities across gender, race, and tenure. Additionally, the growing prevalence of remote work in these sectors introduces challenges in adjusting for geographic differences in living costs, while ensuring equitable pay and career progression for all employees. These shifts reflect a strong industry-wide commitment to attracting and retaining diverse talent through fair and transparent compensation practices.

Simonetta Saprio
Senior Partner at Page Executive Italy
Global Head of Healthcare & Life Sciences practice

4. The Business Case for Transparency and Equity 

Beyond fulfilling legal requirements, transparency and equity bring substantial benefits to an organisation. Businesses that take proactive steps toward transparency can strengthen their reputation, improve talent retention, and position themselves as attractive employers.

What’s more, the directive allows companies to balance equitable pay with merit-based rewards, ensuring that performance remains a key differentiator.

In today’s competitive job market, companies that fail to align with these expectations risk falling behind. Beyond compliance, transparent practices can boost employer branding, enhance internal trust, and attract talent who prioritise fairness and equality.

Lorena Gutierrez emphasises the need for reflection: 

For some organisations, this directive will require a moment to rethink their brand, purpose, and HR strategy. It’s not just about compliance; it’s about embedding equity into the company’s DNA. It’s essential to give meaning and be conscious of the impact before “simply” displaying the figures. Career management and progression should be at the heart of this shift—recognising potential and fairly rewarding contributions, regardless of age or tenure, while maintaining a healthy competition; it’s about embedding fairness and transparency into every level of decision-making to build trust and loyalty across the workforce. 

5. Preparing for the Future: A Proactive Approach  

Preparing for the EU Pay Transparency Directive will require proactive planning, particularly for companies that have yet to implement transparent pay practices.  

Surprisingly, a study Page Executive recently conducted in France found that half of all companies surveyed were either unaware of the directive or had limited knowledge of its implications, and over 30% do not currently communicate their pay policies openly.

For executives, the road to compliance starts with evaluating current pay practices, identifying gaps, and implementing transparent systems. Although specific sanctions are still being defined, it’s wise for leaders to act now rather than wait. Transparency is increasingly valued by employees, and early action demonstrates a commitment to fairness, strengthening both team cohesion and the company’s brand. 

Seizing the Opportunity for Transformation 

The EU Pay Transparency Directive is a transformative opportunity for businesses to create more equitable workplaces. For executives, compliance is just the beginning. By championing transparency and fair pay, leaders can foster a culture of integrity and trust that resonates with today’s workforce.

In a competitive landscape where employee engagement and loyalty are increasingly linked to ethical practices, leaders who embrace this directive’s principles can build organisations that attract and retain the best talent. It is not only a call to action but a path toward a fairer future in which transparency and equity are integral to every workplace.

Page Executive can help you tailor your strategy and compensation practices to ensure transparency and adaptability while staying aligned with your core values. Get in touch with us today!