Wage transparency: a legal obligation by 2026

La pay transparency is still rarely part of the corporate culture, or even remains a taboo subject. If a number of companies were still wondering about its application, while others strongly refused it, the question will soon no longer arise. In fact, theEuropean Union adopted a directive requiring wage transparency in 2023^[1], which must be transposed into the law of the member countries by June 2026. What exactly are the new rules? What are their goals? How to implement wage transparency? Responses.‍

What is wage transparency?

The need for wage transparency is rooted in the discrimination that some women in particular are still victims of, despite the various laws that have already been adopted.

The legislative framework

La Equal Pay Act Between women and men on 23 March 2006 Aimed already at the elimination of discrepancies of remuneration. Then, the Professional future law of September 5, 2018 imposed on businesses a obligation to achieve results in terms of equal pay, with the establishment of the Index ofprofessional equality women-men. It is followed by the PACTE law of 22 May 2019, which requires businesses of CAC40 to communicate the pay differentials existing between employees and their managers, i.e. “the ratio between the remuneration of each director and the average remuneration and Median Employees at fulltime ”.

Pay gaps that are still relevant

Despite these differences laws on equal pay for men and women, of discriminations enduring. For Explain these differences of remuneration, we can mention, among others, sexist stereotypes, the famous glass ceiling, or the lack of sharing of family responsibilities. In addition, at return from maternity leave, women were often penalized in Wage material, their remuneration having stagnated. However, the law provides that they can benefit from the same increases as their colleagues, which induces an effect of remedial. Their career development is then also often hampered, with a certain number of them then preferring to occupy a parttime.

Even today, in the EU, Women win on average 13% less than their male counterparts, which has, in the longer term, dramatic consequences on their pension, with a difference of up to around 30%. LEqual pay enters men and women will certainly involve wage transparency, which will make it easier to identify all discrimination And of bridge the differences of salaries for men and women.

A new European directive

After agreeing on the need to remove discrepancies of remuneration between The men and the women, the European Parliament and the Council adopted a Directive on the transparency of Remuneration, April 24, 2023. Thus, the countries concerned have three years to transpose these rules into their legislation. Here are the main measures:

• The companies of The European Union have an obligation to make available information on the remuneration they pay to women and men for a work of equal value. They are also required to communicate to the national authority thepay gap Between the women and men And of take action if it exceeds 5%.
• Employees will therefore be able to ask to receive information On the average pay levels, depending on Sexes, for the categories of employees carrying out the Same job or work of the same value. They have a right of access to the criteria used to “determine compensation, pay levels and pay progression”, criteria that must be objective and not sexist.
• Companies that recruit must fill in the jobseekers On the starting salary or initial pay range

Businesses that do not respect these rules will be sanctioned. 

What are the advantages and obstacles to wage transparency?

Due to regulatory obligations, communication within companies will have to develop, around a subject that is still too often taboo.

The main obstacles

For historical, cultural or structural reasons, the question of salary is still an often taboo subject, a vector of jealousies, some having negotiated better than others, for example.

• ‍Persistent and disparate wage differentials

Apart from the wage discrimination which still persists between men and women, the size of the company and its culture can influence how remuneration is determined.In a Start up, VSE or family SME, the salary is sometimes decided according to negotiations with the new employee, without reference to salary grids formalized. This gives rise to Wage differentials sometimes important, especially when it comes to recruiting for jobs in tension, or in a sector of activity like IT. Les Wage differences therefore also exist outside of sexist discrimination. Indeed, for a position of the same value, a person can have more skills and perform better. However, it is necessary to be able to justify discrepancies with employees. Thus, wage transparency involves certain risks for the social climate, if it has not been prepared in advance.

• ‍The absence of a remuneration policy

So generally the big companies have put in place a structured remuneration policy, some companies do not yet have a system for objectively evaluating a work of Equal value and therefore his remuneration. Hence their fear of communicating about salaries.

According to an investigation by WTWCO^[2] On the transparency of remuneration, 50% of the companies surveyed say that their current remuneration policy is not ready to be communicated. Thus, only 6 out of 10 companies have developed a job classification system and 54% have developed a job architecture.

The benefits of wage transparency

Despite the constraints that the European directive imposes on companies, the objective is virtuous and should lead to greater performance and equity.

• ‍More effective recruitments

When the salary is not displayed in job offers, there is a risk of losing the candidate during the process of recruitment (disappointment when discovering the salary, wasting time in unsuccessful negotiations, leaving for a competitor who has an attractive salary). In addition, 46% of candidates say they do not respond to job offers that do not mention salary^[3]. So, on a labour market In tension, the new obligation to display the level of remuneration on job advertisements should attract more applications and, in fact, fully informed candidates. One recruitment agency will also see his work facilitated since he will be able to focus on the essentials, skills, and recruit future employees more quickly. Even if it can also complicate the exploratory work that is sometimes requested by the client to go beyond the initial brief. ‍

• ‍A lever for pay equity

According to the adage “to tEqual work, equal pay”, the new legislation on wage transparency aims to achieve a pay equity, in particular by eliminating hidden discrimination. To prevent wage discrimination, it encourages companies to rely on a real remuneration policy, with job classification and salary grids, as well as to communicate transparently. In addition, women tend to ask for a lower salary than men^[4], better information would see the gender gaps to reduce.

• ‍A decision support tool

Another benefit of transparency, when it is operational, is to simplify salary negotiations With the social partners. This makes it possible to provide reasoned and quantified answers, before launching campaigns ofincreases. In addition, during an annual interview with an employee, a manager can explain with pedagogy his decision to grant or not an individual increase and/or a promotion, based on objective and measurable criteria. Obviously, this will not prevent some employees from operating by comparison clumsy and from continuing to feel aggrieved.

• ‍Increased loyalty

Reliable and transparent communication on remuneration is also a way of maintaining the human capital of the company. This establishes a relationship of trust and contributes to recognition, insofar as an employee is paid at fair value. Salary transparency immediately shows potential candidates the possible career development and allows current employees to project themselves into the company for the long term.

How to implement wage transparency?

The companies concerned have a period of three years to successfully implement wage transparency, by complying with certain steps.

Carry out an inventory of the existing situation

Avant All things, it is essential to analyze the causes of discrepancies of salaries between men and women, to identify salary ranges and ensure that they are appropriate, in order to develop a action plan effective. Indeed, for a work of Equal value, of disparities frequently exist within a same company. It is essential to be able to remove inequalities, hidden or not, or to start a Salary catch-up progressive, if necessary, to prepare for wage transparency and communication with employees.

Define a remuneration policy

Compensation, strictly speaking, includes the base salary and salary accessories (individual and/or collective bonuses, profit-sharing, participation, benefits in kind, etc.). Various tools allow the implementation of a fair and structured remuneration policy.

• ‍The collective agreement : Most of the time, it is enough to refer to the collective agreement of the professional branch to find out the classification of jobs. Each reference job is associated with a coefficient or a hierarchical index that sets the conventional minimum remuneration.‍
• The weighing of the posts: Job evaluation is carried out by measuring certain criteria for each function such as autonomy and creativity, the complexity of solving problems, responsibility, etc.‍
• Job classification : The weighing of positions gives a score which then determines the classification of jobs, such as, for example, a level 1 to 3 manager, a level 1 to 4 supervisor, employee, worker etc. This classification makes it possible to define the foreseeable career development and the level of remuneration that will be associated with it. ‍
• Salary grids : They include various criteria such as position, wage coefficient, point value, and minimum fixed base wage. All these objective criteria also make it possible to understand the wage differences, Who wouldn't be discriminatory, and in particularExplain the discrepancy of salary between what an employee receives compared to one of his colleagues on the same type of position (seniority, job category, diplomas and level of studies).

Finally, in terms of strategy, and to meet transparency obligations, it is crucial to define SMART objectives (Specific, Measurable, Achievable, Realistic and Timely Defined) to justify individual increases, Or of a bonus linked to the individual performance.

Prepare your communication!

Once the remuneration policy is structured, it is essential to train managers since they are generally the ones who transmit information to employees. With the support of reference documents, employees must be able to place themselves on the remuneration scale, and to project themselves in their career. Being accompanied and informed avoids the unsaid and maintains a relationship of trust with the employer. As for external communication, it is a good idea to display the salary or a range of initial remuneration in job offers, and, when interviewing candidates, to communicate on career development schedules.

In conclusion, the establishment of wage transparency marks a crucial change in the European world of work. The directive adopted by the European Union aims to close persistent pay gaps between men and women by making salary information accessible and by encouraging fair remuneration policies. Despite the challenges to be overcome, such as cultural resistance and the absence of clear pay policies, the potential benefits are significant: better pay equity, more effective hires, and a stronger relationship of trust with employees.