According to the original timeline, the EU Pay Transparency Directive was expected to be implemented into the national legislation of EU Member States this month. However, most Member States, including Croatia, have not yet completed its transposition, either through amendments to their Labour Acts or by adopting dedicated legislation implementing the Pay Transparency Directive.
What if there is still no clear legal framework or guidance in my country?
It is important to understand that the Pay Transparency Directive is a legal instrument that obliges Member States to transpose it into their national legislation, rather than imposing obligations directly on employers. Until a Member State incorporates the Directive into its national legal framework, employees generally cannot directly require private employers to apply its provisions.
Under EU law, an unimplemented directive may, after the implementation deadline has passed, have legal effect in relation to the state and its public authorities (direct vertical effect), but not in disputes between private parties, such as an employee and a private employer. In other words, employees working for private companies cannot automatically rely on the Directive itself to require employers to comply with its new obligations before those obligations become part of national legislation. Any potential claims would instead have to be pursued through separate discrimination or anti discrimination proceedings before the competent courts.
If employees cannot yet rely directly on the Directive, why should organisations act now?
Implementing pay transparency is not a project that can be completed within a few weeks. Building salary structures, analysing internal pay gaps, aligning pay setting criteria, and preparing reporting systems all require time, reliable data, and collaboration across multiple business functions. Pay disparities, inconsistencies in job classification, or unclear reward criteria cannot be effectively addressed after the reporting period has already ended.
It is also important to recognise that the labour market is already behaving as though pay transparency has been introduced. Many employers still view this topic primarily through the lens of regulatory compliance, where many uncertainties remain. However, CHROs and business leaders should recognise that employee, candidate, and labour market expectations have already changed. Regardless of implementation deadlines or national legislation, pay transparency is becoming the standard by which employees assess organisational fairness, leadership quality, and employer credibility.
According to the latest Alma Career survey (N = 350), 70% of employees do not expect the Directive to change pay transparency practices in job advertisements unless employers are legally required to do so. The Directive does not automatically require salary ranges to be published in job advertisements. Instead, it establishes a broader framework whose implementation will differ across organisations and labour markets. Nevertheless, 23% of respondents believe that the Directive could encourage employers to become more transparent as a result of broader regulatory and social pressure. In both cases, expectations regarding transparency already exist and continue to shape the labour market regardless of the formal regulatory framework. Candidates are far more informed than they were in the past and are increasingly confident during recruitment processes, salary negotiations, and career progression discussions.Research also shows that 62% of employees would consider changing jobs because of a lack of pay transparency, with this figure rising to more than 75% among younger generations.
Pay transparency is a matter of trust
Many organisations assume that meaningful change will only occur once regulatory requirements become legally binding. In practice, the opposite is happening.
Today, candidates:
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compare salaries through specialised platforms
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share their experiences on social media
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exchange information within professional communities
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expect clear criteria for career progression and pay decisions
At the same time, employees increasingly ask questions such as:
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Why does a colleague at the same level earn a higher salary?
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What are the criteria for receiving a pay increase?
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What is required to move into a higher pay grade?
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How is the market value of my role determined?
If an organisation cannot provide clear answers to these questions, the result is a loss of trust and a perception of unfairness.
When employees believe they are paid less or valued less than others performing the same or similar work, their motivation, engagement, and productivity decline. Feelings of unfairness often arise because of a lack of transparency in key processes such as salary decisions, promotions, and career development. For example, if employees do not understand the criteria used to determine why rewards or opportunities differ between them and their colleagues, they may perceive unfairness even when objective differences do not exist.
Why does fairness matter to employees and how can it be measured?
Maintaining the trust of employees and candidates
Organisations with higher levels of workplace equality tend to achieve greater profitability and innovation. On the other hand, a lack of transparency in reward systems can undermine employee trust and engagement. The key question is whether organisations are able to clearly explain and justify decisions related to pay and career progression using objective and reliable criteria.
The evaluation carried out by our consultants as part of the Equal Pay Champion project views transparency not as a communication or regulatory requirement, but as the outcome of a mature HR system. Organisations that lead the way in ensuring equal pay for work of equal value, and in promoting broader business transparency, have HR processes developed to a level where regulatory changes can be implemented operationally without major structural interventions. Organisations that have completed the Equal Pay Champion evaluation do not see the Directive as a burden, but as confirmation that they are moving in the right direction. Their advantage comes from well established internal structures combined with guidance from our experts, who have spent more than twenty years developing and benchmarking HR systems across organisations of different sizes and levels of maturity, creating valuable insight into market practices and standards.
Pay transparency is a test of management and HR maturity
Being prepared for pay transparency, even before formal implementation, is a test of management and HR maturity. It requires a system that enables consistent decision making on pay and promotions and allows those decisions to be made and explained using clear and comparable criteria. Without such a system, organisations risk more than regulatory non compliance. They also risk losing management stability at precisely the moment when it matters most.
The organisations that will be best positioned are those whose HR systems support consistent reward management through clearly defined and measurable criteria applied equally to everyone.
Our mission is to recognise organisations that are leading the way and to support those that are only a few steps away from reaching that standard.
