The Sliding Scale of Pay Transparency: Finding the Right Level for Your Business

In case you haven’t noticed, pay transparency is a hot topic in 2025. That’s partly because of incoming regulations (you probably don’t need us to tell you about the EU Pay Transparency Directive, which is set to enter into force by summer 2026 at the latest). 

But it’s also a reflection of changing attitudes: today’s employees have an increased focus on pay equity and fairness, and expect more openness from their employers. 

This means that many employers are grappling with an important question: exactly what is the right level of transparency to aim for? After all, there’s a vast ocean between the minimum standards set by the EU Directive and total transparency across the board. 

The simple answer is, it’s different for everyone. The right approach for your organisation depends on your industry, company size, culture, strategy and more — keep reading for help finding the sweet spot for your business. 

The sliding scale of pay transparency

Before you can choose the right approach for your company, it’s important to consider  what different levels of pay transparency might actually look like. To get started, here’s a breakdown of six different levels you could aim for: 

• Level #1: Full pay secrecy: Only HR, finance, and hiring managers have access to any pay data. While employees are aware of their own salary, they lack a clear view of how it fits into the company’s wider pay structure. 
• Level #2: Minimal transparency: Employees have visibility over their own salary range and understand where their pay sits within it. However, they have no insights into how their pay compares to others within the organisation. 
• Level #3: Limited pay transparency: Employees can see their salary band and the one above it. This provides more visibility into career progression, helping employees understand the paths available to them. They still don’t know how their pay compares to others. 
• Level #4: Moderate pay transparency: All salary ranges are shared internally, giving employees a good understanding of the company’s overall pay structure. They may still have a limited understanding of the reasoning behind pay decisions, and individual salaries are not disclosed. 
• Level #5: High transparency: All salary ranges are shared internally, and employees also have insights into how pay is determined. They have access to clear information on how to progress within the organisation — but may still not know other people’s exact salaries. 
• Level #6: Full pay transparency: All pay information, including pay bands and individual salaries, is available to everyone. Employees have a clear understanding of the company’s pay structure and the criteria behind pay decisions. In some cases, this information may also be shared externally. 

Of these, Level #1 is becoming less common — and will be difficult to justify under new pay transparency legislation. And, while some companies do go as far as Level #6 (Buffer’s open salary policy is one example), it’s relatively rare. Most companies land somewhere in the middle. 

Not just about the numbers 

Of course, pay transparency isn’t just about sharing salary ranges (or even exact salaries) with your team. You’ll need to consider how open you want to be about different aspects of your compensation structure, including your compensation philosophy, pay structure and processes. Here are a few things to think about. 

Transparent compensation philosophy 

Let’s start with the basics: do your employees know where you stand on pay? Being open about your compensation philosophy (i.e. what your pay structure is set up to reward and why) can help employees see who you are as a company — which can help build trust and engagement. 

Transparent pay structures 

Being clear about the way your pay is structured is also an important part of pay transparency.  For example, if employees know how many career tracks, job levels and salary bands your organisation uses, they’ll already have a clearer understanding of the context behind their pay — even if you don’t share actual numbers. 

Transparent pay criteria and processes

Understanding the why behind their pay could be even more important to employees than open salary bands. That’s because it shows their pay is based on a solid process and backed up by consistent criteria — and not a result of bias or favouritism. 

Transparency for job candidates 

Salary transparency for jobseekers is a key requirement of the EU Pay Transparency Directive. However, companies should be wary of jumping straight to publishing salaries in job ads without doing the internal work first. After all, if your existing salaries aren’t in line with what you’re offering new hires, you could cause frustration and resentment among your existing team. 

Choosing the right level for your organisation 

Every business is different — and there’s no one-size-fits-all approach to pay transparency. Here are some of the different factors you’ll need to consider as you decide on the right level for your organisation: 

• Legal obligations: Depending on where your company is based, you may have to meet certain minimum pay transparency standards to be compliant with the law (we’ll discuss the upcoming changes for EU companies below).
• Company culture: Companies that value openness and trust may be more suited to transparency, while those with more formal cultures might lean towards pay secrecy. 
• Talent strategy: Many companies use open salary bands as part of their strategy to attract top talent. Whether this approach is appropriate for your business depends on your industry, culture and wider business goals. 
• Internal readiness: You’ll also need to consider whether your pay structure and systems are ready for scrutiny. If not, you may need to spend some time getting them in line before you fully embrace pay transparency.

The bare minimum for EU employers 

For companies in the EU, pay transparency is no longer a nice-to-have. The EU Pay Transparency Directive was approved in 2023 and will be in force across member states by June 2026 (see our implementation tracker article to find out how countries are already putting it into action).

That means that, by summer 2026 at the latest, employers in Europe will have to meet at least certain minimum standards when it comes to pay transparency. This will include: 

• Sharing salary information with job candidates: In some countries, this will have to be included in published job descriptions. Others have less stringent requirements but still require basic transparency for job seekers.
• Responding to employee information requests: Under the new rules, employees will be able to request information about their pay and how it compares to others doing ‘work of equal value’. Employers will have to respond within specific timeframes depending on the country.
• Compiling and publishing regular gender pay gap reports: Gender pay gap reporting is another key part of the directive. Employers with 150+ employees will have to report every three years, and those with 250 or more will need to file annual reports.
• Sharing information on pay structures and decision-making criteria: Employers will need to be transparent about the criteria they use to make pay decisions — which must be fair, gender-neutral and objective. Keeping employees in the dark about the structure and process behind their salary will no longer be an option. 

Going beyond compliance: the benefits of pay transparency

Once the directive is in effect, employers in the EU could face fines, penalties, and other legal consequences for non-compliance. In other words, there are good reasons to make sure you’re at least meeting your minimum legal obligations. 

But some companies will go further than the directive requires, opening their pay structures up to greater scrutiny and providing even more information to employees. The truth is, while pay transparency strikes fear into the hearts of many employers, it also has a lot of benefits. For example: 

• Helps ensure equitable pay: Pay transparency brings pay inequities and discrepancies out into the open — allowing you to stamp out those differences and make pay fairer for everyone. 
• Aids recruitment: Today’s employees want to work for companies that value pay equity and fairness. Going beyond legal obligations could help you attract and retain talent. 
• Improves trust and morale: Pay transparency helps demonstrate your commitment to employees. This helps them to feel seen and valued, which can boost trust and engagement. 
• Encourages career progression: When companies are open about pay, employees have a clearer picture of the progression paths available to them — which can encourage retention. 
• Provides a competitive advantage: The directive will mean a big shift for all companies in Europe — so simple compliance won’t be enough to stand out. Going above and beyond the directive’s requirements shows employees that you truly care about transparency. 

Preparing for pay transparency: how to get ready now

For companies in Europe, there’s no avoiding pay transparency. While there’s no one right approach, ignoring the issue altogether is no longer an option. 

A word of warning, though: most companies can’t go from 0–100 overnight with zero preparation. Doing so could reveal inequities and problems that you may not even be aware of — causing resentment and frustration for your team. 

In other words, pay transparency takes preparation. Using a tool like Figures can help you to get your pay structures in order before opening them up to public scrutiny. You can use our platform to build consistent salary bands in a matter of minutes, and even benchmark your salaries against the market to ensure they’re competitive. 

Want more advice on preparing for pay transparency? Download our full checklist, which is packed with insights from compensation experts and freshly updated for 2025.