Building the Foundations for the EU Pay Transparency Directive

In June 2023, the European Parliament made a significant stride towards ensuring pay equity and transparency across all member states by signing the EU Pay Transparency Directive in the EU Official Journal. This is the latest milestone in a multi-year effort to ensure equal pay for equal work (or work of equal value) across Europe. I spoke with Catherine De Lannoy, director, organization effectiveness & strategic workforce planning at Bekaert about her experience preparing for the pay transparency directive so far. 

Not only does Belgium-based Bekaert regonise the introduction of this directive as a compliance requirement, they view it as a crucial component of their Diversity, Equity, and Inclusion (DEI) strategy. De Lannoy shares, “We view it as an opportunity to gain additional insights into country-level differences, refine our HR processes, address potential pay gaps, and ensure that our female colleagues are not just represented but also valued and integral to our operations. As such, while the directive won't take effect until 2026, with reporting beginning in 2027, we have opted to take a proactive stance."

She continues, "Just as you set the groundwork early for any significant project, we believe that setting the foundations for pay equity and transparency early will help us overcome any potential challenges, closing any potential gaps ahead of time.”

Reporting on pay equity 

The directive mandates that EU employers with more than 100 employees (or UK employers with more than 100 employees in EU states) comply with the legislation and reporting requirements for that location. The reporting requirements are staggered based on company size:

• Employers with 250 or more workers must submit their initial report for 2026 data by June 7, 2027, and then continue to report annually.

• Employers with 150 to 249 workers must also submit their first report by June 7, 2027, but are only required to report every three years thereafter.

• Employers with 100 to 149 workers are required to submit their first report by June 7, 2031, and continue reporting every three years.

• Employers with fewer than 100 workers are not mandated to report under the directive, though they may opt to do so voluntarily. However, member states may require these employers to provide pay transparency information.

Data to be reported in the EU Pay Transparency Directive

Under the directive, employers must compile and report the following information:

• The gender pay gap.

• The disparity in gender pay within supplementary or variable components.

• The median gender pay gap, defined as the difference between the median pay of female and male workers, expressed as a percentage of the median male pay.

• The median gender pay gap in supplementary or variable components.

• The proportion of female and male workers receiving supplementary or variable components.

• The distribution of female and male workers across pay quartiles, with each quartile representing one-fourth of the workforce based on pay levels.

• The gender pay gap by worker category, detailed by base salary and supplementary or variable components.

De Lannoy shares, “At Bekaert, we focus on comparing two key metrics: a person's relative position within their pay band and the representation of females across different pay levels within the company.” She continues, ”The first metric helps us assess whether individuals in the same job classification are rewarded equitably. The second metric evaluates the diversity within our leadership teams compared to operational staff. Both metrics are crucial for ensuring equity across all levels of the organisation.”

To enhance reporting efficiency, Bekaert also consolidated its salary data and programs while emphasising relative positioning within salary bands. De Lannoy comments, “This approach enables us to conduct meaningful comparisons across regions and job levels rather than merely comparing euro amounts, which is less relevant internationally.”

Democratising people insights

One of the important aspects of this directive is democratising these insights to employees—hence, the word "transparency" in its name. De Lannoy remarks, “At Bekaert, we believe that knowledge is power and we are open to sharing people data on an aggregate level towards all our Visier users to ensure that our people can benchmark themselves against other departments, other functions, or other regions through the Visier platform. Only when drilling into individual details have we put privacy restrictions in place. We intend to apply the same approach when it comes to pay information as soon as this module goes live.”

As the involvement of HR business partners and business leaders is crucial for the success of this directive, Bekaert will also create a guidebook. “This guidebook will serve as a tool for them to track their teams' performance regularly and gain valuable insights into potential areas for improvement and ways to address potential gaps. We believe that providing access to these insights will not only help us address any potential issues but also empower our employees to advocate for themselves and their colleagues. Therefore, by making this information available to all, we aim to promote transparency and encourage open conversations around pay equity and representation within our organisation,” De Lannoy adds.

People analytics vs HR reporting

Identifying and addressing pay gaps requires more than basic HR reporting. To drive better equitable business decisions, HR leaders need to turn people data from multiple sources into strategic insights easier, faster, on-demand, and at scale. This is where best-in-class people analytics comes into play, and it is one of the main reasons why organizations like Bekaert opt for a partnership with Visier. 

De Lannoy explains, “Previously, our process was manual and highly labour-intensive, involving extensive data extraction from SuccessFactors and manipulation in Excel and Power BI. As you can imagine, this often resulted in outdated or inconsistent data, making it challenging to identify and address any potential pay gaps. With Visier, we have streamlined this process by integrating our HR systems into one unified platform, extracting real-time data, and leveraging advanced analytics to identify potential pay gaps and provide actionable insights for addressing them.”

As a result, they've already identified bottlenecks in their talent acquisition processes. De Lannoy shares, "We realised that we had inadvertently introduced new gaps by relying on candidates' current pay during the recruitment process, potentially importing disparities from other employers. Now, we can adjust our recruitment processes to consider the current pay situation of team peers to avoid reintroducing closed gaps—a change that will contribute to our ongoing efforts to promote pay equity."

She continues, "This is a prime example that demonstrates that reporting on pay discrepancies is more than just comparing the issue. To gain a comprehensive view, we need to understand our organisation's demographics and factors that may contribute to pay gaps. That is achieved through integrating additional workforce data such as individual performance, compensation data, promotion rates, and even skills data to understand the outliers and what is driving them.”

Preparing for 2026 and beyond

Ahead of local legislation coming into force, Bekaert is actively preparing for the upcoming requirements. This will ensure the organization is ready to meet the EU Pay Transparency Directive's targets by 2026.

De Lannoy shares, “By leveraging our partnership with Visier, we can proactively collect and analyse our data in real-time, identify potential areas of attention, and democratise the insights to take necessary action.” 

“However, our approach to pay transparency is not just about compliance—it's about fostering a culture of equity and inclusivity. With Visier, a unified people data platform that allows us to analyse and take meaningful actions towards achieving pay equity, we are better positioned to manage pay equity risks and drive meaningful change within our organisation”, De Lannoy concludes.

On the Outsmart blog, we write about workforce-related topics like what makes a good manager, how to reduce employee turnover, and reskilling employees. We also report on trending topics like ESG and EU CSRD requirements and preparing for a recession, and advise on HR best practices like how to create a strategic compensation strategy, metrics every CHRO should track, and connecting people data to business data. But if you really want to know the bread and butter of Visier, read our post about the benefits of people analytics.