The EU Pay Transparency Directive must be implemented in member states by June 2026 at the latest. Consequently, the directive’s binding provisions will apply within one year to Finnish companies of all sizes—in both the private and public sectors.
This hot topic in compensation discussions requires organizations to analyze and report their salary data far more thoroughly than before. Naturally, unexplained pay gaps remain a burden in many companies, undermining job satisfaction and potentially jeopardizing the company’s competitiveness from an employer branding perspective.
The central objective of the EU Pay Transparency Directive is to clarify employer responsibility in a manner that may challenge many operational practices and mindsets within companies. The directive shifts responsibility for fair pay formation to the employer and reverses the burden of proof in discrimination cases from the employee to the employer.
The company must be accountable for pay accuracy
Going forward, employers must remain vigilant regarding their compensation responsibilities. According to the Pay Transparency Directive, employers must disclose salary information in recruitment situations—for example, a salary range—either in the job advertisement or at the latest before the job interview. As we well know, it has been common practice in Finland to omit salary information, leaving the responsibility for requesting appropriate compensation to the job seeker.
In practice, introducing salary ranges into job advertisements requires a clearly structured compensation system that is also adhered to within the organization. Pay differences between various roles must be explainable on sustainable, consistent, and fair grounds. When the groundwork is in order and the rules are the same for everyone, presenting salary ranges should not pose any significant difficulty.
However, in a culture based purely on negotiated salaries, the situation may be more challenging. If salary levels vary in similar roles depending on an individual’s negotiation skills during the hiring process and later during salary review cycles, presenting salary ranges in job advertisements becomes a more complex issue. What then justifies the salary range presented in the job advertisement?
Are you prepared to disclose salary in job advertisements?
If an organization lacks transparent salary structures and a consistent approach to salary increases, publicly stating a salary range in a job advertisement can easily spark critical discussion within the workplace: “How exactly are our salaries determined, and are these determination methods even fair and equitable?”
Many concerns related to presenting salary ranges can be addressed by establishing compensation principles and ground rules that are then followed systematically and apply to everyone—both current and future employees. This is conducive to increasing employee trust.
In public discourse, disclosing salary ranges is often viewed as either extremely difficult or as self-evident. However, it is important to recognize that high-quality salary data is the foundation of all analysis and fair compensation.
An interim specialist is the best resource for building the required capabilities
Finnish companies should prepare for the EU Pay Transparency Directive during the coming autumn. With the assistance of a compensation specialist, a clear understanding of necessary changes to operational practices and a corresponding development plan will emerge. A concrete implementation timeline for improvements is also needed for the coming winter and spring.
Cherry’s compensation-focused interim specialists help your company meet the directive’s requirements and build equitable and functional compensation practices. Acquiring such specific expertise as a service is also advisable because top compensation specialists are in short supply. An experienced professional simultaneously ensures that compensation models support your business strategy and organizational objectives.
Simply get in touch, and we can discuss further and launch your compensation reform project immediately after the holidays!
