Salary transparency has been one of the hottest topics in the job market for several years. The upcoming changes resulting from EU regulations on salary transparency are leading more and more employers to ask themselves:
👉 Will salary still be considered personal data?
👉 What information will be allowed to be disclosed to candidates and employees?
👉 How will these new responsibilities affect recruitment processes and personnel management?
This topic is of particular importance to companies operating in the fields of recruitment, temporary staffing, process outsourcing, and the employment of foreign nationals.
Is salary considered personal data?
Right now, the answer is: it depends.
The amount of compensation alone does not always constitute personal data. However, if it can be linked to a specific individual, this information is subject to the protections provided by the GDPR.
In practice, this means that:
✔ An individual employee's salary is confidential information,
✔ An employer may not disclose individual employees' salaries at will,
✔ Access to such data should be restricted to authorized individuals.
For years, companies have based their salary confidentiality policies on this very principle.
What will the new regulations change?
The EU directive on pay transparency aims to increase transparency in the labor market.
The goal of these changes is to reduce pay disparities and provide job applicants and employees with greater access to information about compensation policies.
The new regulations will mean, among other things:
Greater transparency starting at the recruitment stage
Employers will be required to provide job candidates with information regarding the offered salary or salary range before hiring them.
In practice, this means that job postings that include a salary range will continue to grow in popularity.
The Right to Information on Compensation Policies
Employees will be able to obtain information regarding the criteria used to determine salaries and promotions.
Restrictions on Pay Confidentiality
Companies will not be able to prohibit employees from disclosing information about their own salaries.
This is one of the most significant changes for organizations accustomed to complete confidentiality regarding their compensation policies.
What do the new regulations mean for employers?
Changes regarding pay transparency will affect virtually every organization that employs workers.
In particular, companies should prepare for:
✔ greater transparency in recruitment processes,
✔ the need to streamline the compensation policy,
✔ more questions from candidates and employees,
✔ the need to clearly define the criteria for pay raises and promotions,
✔ Greater consistency in communication between HR, managers, and executive management.
For many organizations, the biggest challenge will not be disclosing salary ranges per se, but justifying pay differences among employees performing similar duties.
Should companies start preparing now? Definitely yes.
Although the full implementation of the new regulations still requires amendments to national laws, many organizations are already beginning to review their compensation policies.
It's worth checking:
✔ recruitment processes,
✔ how salaries are communicated,
✔ privacy policies,
✔ job evaluation systems,
✔ Rules for promotions and pay raises.
The sooner an organization gets these areas in order, the easier it will be to adapt to the new responsibilities.
Salary transparency is one of the most important trends that will shape the labor market in the coming years.
Regardless of the final form of national regulations, it is already clear that candidates expect greater transparency, and companies are increasingly competing not only on salary levels but also on the transparency of their employment policies.
Employers who streamline their compensation processes and policies early on will be better prepared for the upcoming changes and will find it easier to attract and retain employees. Let’s talk about what we can do for you.