How Financial Institutions can Prepare for Pay Transparency Legislation

The European Union Pay Transparency Directive is upon us, and many financial institutions (FIs) are not yet prepared. An Aon survey of more than 200 organizations across the globe conducted in July 2024 found 57 percent of FIs have implemented new processes or programs to address pay equity and pay transparency compared to 62 percent of all industries.

The EU directive came into effect on June 7, 2023, and each of the 24 Member States have until June 7, 2026, to implement it into their own law. The directive requires companies with at least 100 employees in an EU country to provide gender-neutral job evaluation criteria and information on the standards used for determining pay and pay progression for all workers. This means a lot of multinational companies not based in the EU need to comply. Employers must also report and share information on the gender pay gap in the overall organization and in distinct job categories. In addition, they must work with employee representatives to assess the causes of pay gaps and remedy them if the reported gap is above 5 percent.