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Employers in the UK with operations in Europe will be paying close attention to the new EU Pay Transparency Directive, which has just come into force. But what does it mean for how they provide benefits? Yanick Chainey explains

The deadline to implement the EU Pay Transparency Directive (EUPTD) into national law came and went on 7 June 2026, increasing HR’s responsibility to report on pay equity.

Transparency is very much the theme here: more clarity for candidates on the remuneration they can expect for a role; more data made readily available to employees, including the criteria which determine their remuneration; and regular reporting to government oversight bodies.

The oversight itself can compel companies to address gaps within a certain timeframe, and potentially impose penalties if they fail to do so.

Beyond Borders: Why the EU Pay Directive matters for UK-based HR (webinar)

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Join our webinar this Thursday, 2 July at 2:00pm to hear what the new laws mean for employers in the UK, with operations in Europe.

Any companies with more than 100 employees in an EU country will be subject to the new rules, which include detailed requirements on data collection and reporting.

It’s also worth noting that “pay”, as it’s described in the EU’s directive, includes all forms of remuneration: salary, allowances and benefits.

And it’s that last facet, with its legacy of complexity, its dispersal across vendors and brokers, which presents perhaps the biggest risk of non-compliance.

Broadly, the role of benefits has been underplayed in this conversation, but it can account for a significant slice of an employee’s overall package.

Pensions, healthcare, allowances…they all add up, they’re held by different vendors, and they’re all subject to renewal or renegotiation. Benefits may not be the biggest piece, but they’re the most complex.

So: more measurement and more reporting. But the data burden isn’t just about satisfying regulatory bodies.

Employees are also given new rights to request pay and benefits information, including average remuneration levels based on colleagues doing comparable work. Businesses affected by the directive can expect a substantial increase in data requests but, for many organisations, this is an opportunity as much as it is an obstacle.

With a single and consistent tech and data foundation which can serve all the organisation’s territories, while allowing local teams to navigate the requirements specific to their country, HR gains the ability to deliver what’s needed right now and the infrastructure to cope with what seems inevitable: more detailed and complex requirements in the years to come.

But while pay (including bonuses and options packages) boils down to a single number, employee benefits tend to be offered with a breadth and profusion which adds an extra layer of complexity.

They are often calculated in different ways from country to country, and by type of benefit, taking into account local legislation and requirements.

Specific fees and renewal rates will vary, making the broader context of value for money and value to the employee harder to ascertain. And they’ll inevitably be spread across years of documents, or hidden in emails and attachments, making them incredibly challenging to surface, collate and distill into a single source of knowledge.

The key, then, is in finding that knowledge – the system of record on which you can rely absolutely.

Once you have faith in your benefits data, it’s much easier to make an informed decision about what to include or not include when reporting across territories (an important topic when you bear in mind that each EU member state will have its own interpretation of what constitutes “pay”).

Reliable data offers a much stronger starting point from which to do your planning. And that’s vital, because there are plenty of tough questions to ask yourself in this process. How clearly do you currently define worker categories? Are your systems even set up to incorporate your benefits offering, ensuring that all rewards are calculated?

For that matter, do you have a clear set of criteria for how employees qualify for benefits, and are those criteria applied consistently and without gender bias? How much of this can be automated, and how will you manage compliance if some countries implement the full directive, while others adapt their own national laws to reflect all or some of it?

Reliable data offers a much stronger starting point from which to do your planning”

Sweden, to take an example, already has some of the world’s most stringent legislation for preventing gender bias in the workplace, but has expressed concerns about how the directive may affect the country’s long history of using kollektivavtal (a collective bargaining agreement) to negotiate remuneration.

The proposed Swedish postponement of the EUPTD is the sort of local complexity that multinational businesses will need to navigate.

The EU’s drive towards equality and clarity in the workplace is admirable. Even the more simple aspects of the directive – such as prohibiting the use of salary secrecy clauses in employment contracts – are strong statements of intent.

But the real question for businesses is whether they have faith in their data. A single, reliable source of truth that empowers HR and benefits leaders to generate reports (or responses to employee self-service HR tools) quickly and easily; to identify historical anomalies or spot examples where promotions or changes to rewards packages have been applied inconsistently; to offer clear communications to the employees who, let’s not forget, are negotiating this change too.

We live in an era where this is easier to do than ever before. The advent of AI-native data analytics allows us to parse information at a speed and accuracy that belies its complexity – even for a labyrinthine world such as benefits, where information sits across PDFs, old spreadsheets and email chains.

Yes, the onus is on the employers to prove that they’re doing the hard work. But the EUPTD also presents an opportunity to increase transparency, and at the same time gain a forensic view of the systems which document reward – systems which may not have been looked at closely for years.

After all, we’re talking about people costs – a major item on the balance sheet. The EU wants a closer look, but looking closer will almost certainly benefit business too.

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Offering targeted subsidies rather than tax breaks to provide routes into work would be the most cost-effective way to tackle the Neets crisis, according to a think tank.

The Resolution Foundation’s Take a chance on me report argues that there is a “vast gulf” in effectiveness in the range of proposals put forward by the government to encourage firms to hire young people.

The number of young people not in employment, education or training (Neet) passed one million earlier this year – a feat the Resolution Foundation believes “risks scarring the living standards of a generation”.

Earlier this month, it was reported that the government could be reconsidering the speed at which it increases the national minimum wage for 18 to 20-year-olds to be in line with the national living wage, the minimum rate for people 21 and over.

The proposed pathway had been to reduce eligibility for full national living wage to 20 in 2027, but Alan Milburn’s recent report on the youth labour market found that many employers find the lower youth rate an incentive to hire young people.

The Resolution Foundation argues that reversing the recent increases to the youth rate of the minimum wage would not be a cost-effective way to boost youth employment.

Firms to get £3,000 grant to hire unemployed young people 

Lord Blunkett: ‘Give young people a hand up, not a hand out’

However, it recommends that the government pause its convergence with the national living wage until youth unemployment begins to fall.

Some have also argued that 2025’s increase in employers’ national insurance contributions puts employers off hiring young people, and so these should be repealed. Doing this would also have an underwhelming effect on youth unemployment, the think tank adds.

Scrapping employer NICs for under-25s entirely would cost the government £5.1 billion and create just 38,000 additional jobs for young people, it estimates.

The report argues that targeted schemes such as the Youth Jobs Grant, which starts this week, would be cheaper and more effective routes.

The report estimates that the Youth Jobs Grant, which offers firms £3,000 to hire an 18 to 24-year-old who has been on Universal Credit for six months or more, will create 2,800 additional jobs at a public cost of around £36,700 each.

The Youth Jobs Guarantee, which funds six months’ part-time employment for those out of work for at least 18 months, would cost £38,000 per additional job, making it three-and-a half times cheaper than scrapping employer NICs.

Between them, these two schemes could bring an additional 37,000 young people into work.

The report also calls for the growth and skills levy, formerly the apprenticeship levy, to be ringfenced for workers aged 24 and under, as three-fifths of these places currently go to workers over 24.

Had the government done this last year, for example, this would have freed up £1.55 billion – enough to fund 145,000 young apprenticeships and provide the firms that take them on with an incentive of £2,000 each.

Lindsay Judge, research director, said that the Neet milestone of a million was “sobering”, and could mean “lasting damage to the life chances of a generation”.

“But reaching for employer tax cuts to resolve this doesn’t add up,” she said.

“Instead, the government should scale up their most cost-effective programmes: more Youth Jobs Grants, a broader Jobs Guarantee, and reforming the growth and skills levy so that it supports young people who would benefit from it the most.”

Shazia Ejaz, director of campaigns at the Recruitment and Employment Confederation, agreed that pausing increases in the national minimum wage for young people would be sensible.

“Higher pay is vital, but rapid increases are adding to sustained cost pressures, with labour costs crucially rising faster than demand and productivity,” she said.

“That squeeze is already limiting hiring, investment and training, particularly in retail and hospitality, which have long offered a foot on the ladder to work for young people leaving school or university.”

The REC is in favour of a “moderation” of employer NICs to “remove one of the biggest barriers to hiring right now”, particularly as employers deal with the impact of the Employment Rights Act.

Ejaz added: “We support a fresh look at the apprenticeship levy to ensure it serves people with a wide range of educational backgrounds.

“There is a strong case for directing more funding towards younger apprentices aged 16-24, while also recognising the valuable role that higher-level apprenticeships can play in certain sectors. The levy system needs a better balance to allow more non university graduates to train given the pressures on limited funds.”

TUC general secretary Paul Nowak welcomed the start of the Youth Jobs Grant this week.

“Along with the Jobs Guarantee, it will open up pathways into work for young people who have been struggling to get a job” he said.

“But the scale of the crisis means the government must go further and faster. That means putting the turboboosters on the jobs guarantee scheme to ensure it’s more widely available and available sooner to those who need it.

“And while increased investment is essential, we must also ensure every apprenticeship offers a genuine opportunity to learn and earn.”

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