Quincy Valencia's Analyst Perspectives

Pay Transparency Mandates Require Preparation for Managing Compensation

Posted by Quincy Valencia on Apr 24, 2023 3:00:00 AM

The world is witnessing a long overdue and significant shift in the realm of pay equity and transparency. On March 30, the European Parliament passed the Pay Transparency Directive, mandating pay transparency and equity within organizations in an effort to close the gender pay gap and ensure equal pay for equal work. This legislation comes with teeth, providing strict mechanisms for enforcement including shifting the burden of proof from the worker to the employer in the event of legal challenges, and stiff fines and direct remuneration for non-compliance. Although not yet passed, similar legislation is under consideration in the U.S. Congress in the form of the Salary Transparency Act and the Pay Equity for All Act of 2023. Combined, these laws and proposals are signaling that this trend is likely to become a global standard. Many organizations have already adopted progressive pay transparency and equity practices, but for those that have taken a wait-and-see approach, preparing for the inevitability of pay equity and transparency mandates could prove challenging.

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Topics: Human Capital Management, Total Compensation Management, Pay Equity

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