Compensation Trends: What’s In and Out for 2025

In HR and compensation, it pays to plan ahead. Thankfully, we’ve spent the last year tracking changes and challenges, and we have a pretty good idea of what 2025 will bring to the world of compensation. If you’re curious about the trends that will shape the year ahead, you’re in the right place.

‍

Exploring compensation trends: what’s in and out for 2025?

‍

The looming presence of the EU pay transparency directive will no doubt have the biggest impact on the world of compensation in 2025. With the June 2026 implementation deadline creeping closer, companies all over Europe will need to be ready to adjust their pay structures and processes to meet the new rules. 

But the directive isn’t the only thing worth considering as we look ahead to the next 12 months. We also need to think about how employee expectations about pay and work in general will continue to evolve throughout 2025 and beyond. External factors like inflation, labour market conditions, technological advancements and changes in supply and demand for certain roles will all undoubtedly have an impact too. 

While we can’t predict anything with 100% certainty, some trends are already standing out as the ones to watch in 2025. And the end of the year is also a good time to leave behind some practices that no longer serve us. Read on to learn what’s in and out for 2025.

‍

In: Preparing for pay transparency 

Let’s start with the big one: at the time of writing, we’re about 18 months away from the implementation deadline for the EU pay transparency directive. By June 2026, all EU member states must have the new rules in place — but many countries will act sooner. 

So, it stands to reason that one of the biggest trends we’ll see in 2025 is more companies making changes to their pay practices to comply with the new legislation. If you haven’t already started preparing for the pay transparency directive, don’t panic — you still have time. But the clock is ticking, and it’s wise to get moving now to avoid last-minute stress. 

Here are a few actions you can take straight away: 

• Assemble a cross-functional task force to help you meet the new requirements 
• Analyse and refine your job architecture to ensure levels are well-defined
• Identify and correct any existing pay gaps by running a pay equity audit
• Rethink your hiring process to minimise bias or discrimination 
• Evaluate your pay criteria to ensure they’re fair and objective

Want to learn more about preparing for the new rules? Read our full guide for more info.

‍

{{cta}}

‍

Out: Asking candidates about their salary history 

Asking candidates about their current or past salary in a job interview or application form was once standard practice — but it’s been falling out of fashion for a while. The reason is simple: this practice can perpetuate historical bias, making it harder for people who have previously been underpaid to ever catch up with their peers. 

That’s one reason why it’s something we expect to see much less of in 2025. But another is that the practice will be banned once the EU pay transparency directive comes into effect — so by June 2026 at the latest. Ensuring managers and recruiters stop doing this now (if they haven’t already) will help prepare your organisation for compliance once the new rules come in.  

‍

In: AI and automation in compensation 

We first wrote about the impact of AI on compensation over a year ago. The technology has evolved since then, and it’s clear that its influence will only continue to grow throughout 2025. In fact, this was a topic that came up at our recent compensation summit (link to replay in French), where Figures CEO Virgile Raingeard discussed the future of AI and compensation with Pierre Monclos, Founder of RH42, and Pauline Ecorcheville, Operations Lead at InstaDeep. 

All three experts agreed that AI will likely be used in the near future for a few different purposes related to compensation. For example: 

• Suggesting salary increases based on factors like market adjustments, performance and more
• Detecting pay gaps and uncovering the reasons behind unfair pay within organisations
• Preparing error-free payroll based on information imported directly from an organisation’s HRIS
• Creating competitive job offers based on market data, salary expectations and other factors

One thing is clear though: at least for now, humans should always have the final say. For one thing, this is a legal requirement under the EU AI Act. But it’s also a necessity: at this point, AI is not capable of understanding all of the nuances that go into  decisions about compensation.

‍

Out: Spreadsheet chaos!

For a long time, Excel (or other spreadsheet software) has been the tool of choice for conducting compensation reviews. But, while it’s certainly a versatile tool, it also comes with a few problems. 

For a start, working with Excel is a long, manual process that involves a lot of stress for HR and compensation teams. There’s also a very high possibility of human error, and one misplaced decimal point could throw the whole thing off. Excel is also not an ideal tool for collaboration. Whoever is managing the review usually has to waste time splitting up sheets to send the right section to each manager, and then collating them once everyone has added their input.

More and more, employers are forgoing traditional tools like Excel and opting for more streamlined, intuitive solutions — like Figures, for example. These modern tools are designed to make the whole process smoother and more efficient.

Figures makes it easy for different stakeholders to collaborate on the process. Since the software records every decision in real time, it also builds in accountability and transparency. It also provides a reliable record of the entire process — something that will become increasingly important under the new EU pay transparency rules. 

In short, 2025 is shaping up to be the year when companies leave spreadsheet chaos behind and embrace smarter tools for compensation management.

‍

{{cta}}

‍

In: Personalised benefits 

In our wrap-up post for 2023, we predicted that personalised, customisable benefits would be a big deal in 2024 — and we weren't wrong. This is something we’ve seen a lot of over the past year, which will only gain momentum in 2025. 

Here’s why: our relationship with work has changed a lot over the last decade or so. More and more, employers are recognising that teams are made up of individuals with diverse preferences and priorities. Offering the same, one-size-fits-all benefits package to everyone may no longer be enough to attract and retain the best people. 

In 2025, staying competitive will mean offering benefits that resonate with different groups of employees. Whether that’s flexible working options, enhanced mental health support, or tailored professional development opportunities, employers will need to listen to what their people really value—and adapt accordingly.

‍

Out: Unstructured pay reviews 

Above all, the EU pay transparency directive will mean one thing for employers: every pay decision must be justifiable. That means organisations need to be ready to demonstrate that decisions are made according to fair, consistent and gender-neutral criteria.

Companies that don’t want to fall foul of the new rules will have to put in place strict processes for compensation reviews in 2025 — and ensure they’re followed. The reason? Simple: when there are no set criteria in place for making pay increases, these are typically left to the discretion of individual managers — a recipe for bias and discrimination. 

This doesn’t mean eliminating all flexibility, but any room for discretion should be carefully defined and monitored. And there’s an added bonus too: structured pay reviews won’t just help you meet regulatory requirements — they’ll also foster a sense of trust and fairness among employees. 

‍

In: Compensation training for managers 

When it comes to compensation, managers have an important role to play. As the people most directly in contact with their teams, they’re best placed to evaluate performance — which has a direct impact on compensation in many organisations. They’re also usually the people responsible for sharing compensation decisions with their reports. 

But despite this critical role, many managers don’t have a clear understanding of their organisation’s pay structures and processes. In 2025, this gap needs to close. HR will need to strip back the jargon and provide managers with thorough, practical training on all things compensation. 

This is even more important in the context of the EU pay transparency directive, which means that organisations need to be ready to justify their pay decisions. Managers will need to fully understand their organisation’s compensation policies to ensure they're consistently applied and avoid perceptions of unfairness. 

‍

{{cta}}

‍

Stay ahead of the game in 2025

Keeping your compensation strategy both competitive and compliant in 2025 will mean staying informed about the latest trends, regulatory updates and industry best practices — which is a lot to keep up with. 

Thankfully, we do the heavy lifting for you: at Figures, we’re always looking ahead to determine what the future will bring to the world of compensation. Our role is to help you navigate whatever challenges and opportunities the year has in store for HR and compensation pros. Keep an eye on this blog in 2025 to stay one step ahead.

‍