Why Robust Analytics and Reporting are Key to Pay Transparency

The EU Pay Transparency Directive is coming, and it will have a transformative impact on the way companies in Europe handle compensation. 

Put simply, companies will need a deep understanding of their internal pay structures and practices — and the inequalities that exist within them. They’ll also need effective ways of transmitting that information to employees. 

In this article, we explore why compensation analytics and reporting will become essential tools for ensuring compliance and fairness in the pay transparency era. We’ll also share some best practices for effective communication with employees about compensation under the new rules. 

The importance of compensation analytics and reporting in 2025

Once the EU Pay Transparency Directive takes effect, you’ll need a clear understanding of the pay disparities that exist within your organisation — and what’s driving them. This will be required to meet two key parts of the directive: 

1. Gender pay gap reporting: Employers with 250 or more workers will have to report annually on various key indicators related to pay equity. Those with 150 and more employees will have to report every three years. This lower bracket will be extended to employees with 100+ employees by 2031. 
2. Employee information requests: Employees will have the right to request information about their pay level and how it compares to the pay of other people performing the same or similar work. Employers will have to provide this information within a reasonable timeframe and remind employees of their rights at least once a year. 

To meet both of these requirements, you’ll need effective reporting systems to monitor key indicators related to gender and pay (more detail on this below). Tracking these details is not just about checking compliance boxes. It also gives employers a clear view of where pay disparities exist and why — a vital first step toward resolving them. 

Key indicators to track for compliance

So, what sort of analytics should you be collecting? The more data you can gather on your organisation’s pay structure, the better you’ll understand it — knowledge is power, after all. But collecting and analysing data can also be a lot of work (and many HR teams are already stretched too thin). 

A good starting point is the set of key indicators that employers will be required to report on under the directive. Since you’ll need to collect these insights anyway, it makes sense to keep a close eye on them between reports so you can easily spot emerging issues. 

Here are the metrics included in the directive’s mandatory reporting requirements: 

• Overall gender pay gap: The percentage difference between the average gross hourly earnings of male and female employees. This highlights overall pay disparities between genders within the organisation.
• Gender pay gap in variable pay: The percentage difference in average complementary or variable pay (e.g. bonuses, benefits, equity) between male and female employees. This shows disparities in additional earnings.
• Median gender pay gap: The percentage difference between the median gross hourly earnings of male and female employees, reported separately for base and variable pay. This highlights differences in typical earnings between men and women.
• Proportion of employees per gender with variable pay: The percentage of male and female employees who receive complementary or variable pay. This helps assess whether men and women have equal access to bonuses and other extras. 
• Gender distribution across pay quartiles: The percentage of male and female employees in each of the four pay quartiles, from lowest to highest. This shows how gender representation varies across pay levels.
• Gender pay gaps in each category of workers: The percentage pay difference between male and female employees within specific job categories, analysed separately for base pay and variable components. This gives a detailed view of where disparities exist in specific roles or categories.

Communicating with employees about pay: best practices for compliance and clarity

In addition to tracking key metrics, you’ll also need to ensure that employees have clear, consistent access to information about pay practices and structures. This is essential not just for compliance but for fostering transparency and trust with your teams. Here are some tips for keeping everyone in the loop in the pay transparency era: 

• Make compensation structures common knowledge: First, employees should have a clear understanding of how pay structures work, where they fit within them and what steps they can take to progress. Make sure they know where to find this information and who to contact with questions.
• Inform employees about their rights: Reminding employees of their right to information on compensation at least once a year is legal requirement under the directive. It’s also a chance to demonstrate your commitment to transparency, reinforcing trust and awareness.
• Update employment contracts if necessary: If you haven’t refreshed your employment contracts in a while, they may contain outdated terms that are incompatible with the directive. For example, you’ll need to remove clauses that forbid employees from discussing their pay with others, which will be banned under the new rules. 
• Train managers and HR teams: HR and line managers are often the first point of contact for pay-related questions. Both should be equipped with the necessary knowledge to communicate pay structures and handle inquiries effectively. Proper training can help ensure consistency and transparency.
• Engage with employee representatives: Once the directive is in effect, employers will be required to carry out a joint pay assessment with employee representatives if their reporting shows significant disparities. Building strong relationships now by working together on issues of pay transparency and equity can help build trust and goodwill. 

How to handle employee information requests 

The EU Pay Transparency Directive grants employees the right to request and receive information on their individual pay level and how it compares to others doing the same or similar work. Employers must respond to these requests within a ‘reasonable’ timeframe — no more than two months. This could place additional pressure on HR teams, especially in larger organisations, so preparation is key

To streamline the process, it’s a good idea to establish a clear, structured approach for handling information requests. That might involve: 

• Establishing a clear process for employees to submit requests
• Setting internal timelines to ensure responses are delivered within two months
• Developing a standardised, accessible format for sharing pay comparisons
• Training designated HR staff to handle requests consistently and accurately

A note on ‘work of equal value’

A key concept under the directive is ‘work of equal value’: the idea that roles requiring similar levels of skill, effort, responsibility and working conditions should be paid equally. To assess this properly, employers will need robust job categorisation and evaluation systems. Only then will they be able to respond accurately and effectively to employee information requests. 

How Figures can support your pay transparency goals 

Figures is an all-in-one compensation management suite that helps you benchmark salaries, create structured salary bands and run seamless compensation reviews — all in one intuitive platform. 

Figures can also help you meet the directive’s requirements and build employee trust by delivering real-time, in-depth analytics on your internal pay structures. Tracking the relevant metrics with Figures gives you visibility into the state of gender equity across your organisation. It also simplifies gender pay gap reporting and helps you respond to employee information requests quickly and confidently. 

Want to learn more? Book a free demo today to see how Figures can support your pay transparency efforts — or stick around on this blog for more expert insights.