The European pay transparency directive comes into force in June 2026. For organisations that want their HR strategy to actually work, this is less a constraint than a catalyst.
There is a tension that many CHROs know well: on one side, strong ambitions around engagement and retention. On the other, a pay policy that nobody can explain coherently not managers, not HR, sometimes not even senior leadership. This contradiction is rarely named. Yet it is one of the most costly ones there is.
Pay transparency does not fix everything. But it forces organisations to resolve something fundamental: arbitrariness. As long as compensation remains a murky territory, managed case by case, no people strategy can fully deliver. The message sent by actions contradicts the one carried by words.
Compensation: the mirror of what the organisation truly values
You can invest in development programmes, display values of equity, build ambitious career paths. If compensation does not follow a legible logic, everything else rings hollow. Employees are not naive: they observe who earns what, under what circumstances pay rises occur, and what that says about the organisation's real priorities.
Pay opacity is not a technical detail. It is a signal. It says: "we are not able or not willing to explain our choices." In a context where expectations around fairness have never been higher, that signal is increasingly poorly received, both internally and externally. Even if moving away from opacity can seem daunting, particularly for SMEs, the right methodological tools exist to structure a compensation policy that allows choices to be justified.
What transparency reveals and why that is valuable
Resistance often comes from exactly this: the fear of what transparency will uncover. Gaps that are hard to justify. Past decisions made without clear criteria. Inherited situations that nobody has had the courage to address.
That fear is understandable and it points precisely to what needs to be dealt with. A people strategy cannot be built on foundations one avoids inspecting. Transparency forces the organisation to look squarely at what it is, and to decide what it wants to become. Correcting an unjustified gap is an act of management. Ignoring it is a risk: legal, reputational, and human.
2026: a deadline, but above all a choice
The European pay transparency directive will apply to every organisation, public or private, from the very first employee. The directive sets a date. Its complexity is real yet the real question is not a legal one: it is a question of posture. Do you want to treat pay transparency as a compliance exercise doing the bare minimum to avoid sanctions? Or as an opportunity to do what should have been done long ago?
Organisations that wait for regulatory pressure before acting always arrive too late, and do it badly. Their employees did not wait to draw their own conclusions they drew them long ago, by watching who got a pay rise, why, and in what silence.
The best people strategies are not those with the finest job titles. They are the ones where employees understand the logic behind what they experience including what they earn.
That is the condition and the only condition under which a people strategy keeps its promises.
By
Axelle Peeters, Co-founder at Coreus
Arianna Kashile, Reward Consultant at Coreus
You may also be interested in this article: Pay transparency: will your company be ready by 7 June 2026?