Podcast Ep 328: With the EU Pay Transparency Directive set to take effect on 7 June, a survey of Irish SMEs found that only 4% believe they are ready. We talk to HR specialists Crystel Robbins Rynne from HRLocker and Fredericka Sheppard from Voltedge about what lies ahead for employers.
The EU Pay Transparency Directive comes into force on 7 June and that gives just weeks for Irish SME business owners to begin putting their house in order.
The directive requires employers to give greater visibility into how pay is set and pay decisions are reached. Ireland has not yet fixed a domestic transposition date, but HR professionals say that that is no reason for business owners to wait.
“Having smoke and daggers around some of these things around pay probably does not help invest in that transparent, engaged relationship with staff anyway”
HR experts warn that years of informal pay decisions, sealed with a handshake rather than a pay scale, will soon need a defensible paper trail.
The legislation will compel companies to publish salary ranges when advertising vacancies, and to demonstrate that pay decisions are based on objective, gender-neutral criteria. Employers must also be able to produce evidence to explain their pay structures on request. For businesses that have spent years deciding salaries on instinct, goodwill, and the occasional fear of losing a valued member of staff, that is a significant adjustment.
According to people management platform HRLocker, most businesses have yet to put in place the systems and processes required to comply with the Directive. While the Irish Government has indicated it will miss that deadline, experts warn that this delay offers little protection to employers.
As Laura Bambrick, Social Policy Officer at the Irish Congress of Trade Unions, said in a report in The Irish Times recently, employees may still be able to pursue claims under the Directive, even before it is formally enacted in Ireland. She noted that compensation could be backdated to June 2026 in cases where rights are deemed to have been breached.
This creates a situation where businesses may face future liabilities based on actions taken today, particularly if their pay structures and decision making processes cannot be clearly justified.
Is your business ready for pay transparency?
“This directive is really trying to bring better structure around what you pay, your pay decisions, and how you overall compensate your people”
-
Listen to the ThinkBusiness Podcast for business insights and inspiration. All episodes are here. You can also listen to the Podcast on:
-
Spotify
-
SoundCloud
-
Apple
“Only 4% of SMEs currently feel like they are prepared for pay transparency,” says Crystel Robbins Rynne, chief executive of HR software firm HRLocker.
HRLocker’s survey of more than 160 SME HR professionals and business leaders points to a significant gap in understanding of the new requirements. Only 14% of respondents said they had a strong grasp of the Directive.
That lack of familiarity is reflected in preparedness levels. Just 4% of organisations consider themselves fully ready, while 31% say they are not prepared at all and a further 14% remain unsure. At the same time, 65% expect the Directive to increase HR and people-related costs, highlighting concerns about the operational impact.
The findings suggest many employers have yet to fully engage with the practical implications of pay transparency, particularly in areas such as pay reporting, employee rights to information, and gender pay gap accountability.
Fredericka Sheppard, managing director of HR consultancy Voltedge, says the Irish workplace carries a particular cultural awkwardness around salary that makes the transition harder than it might be in comparable European countries.
“We know that so many of the difficulties can stem from pay-related matters,” she said. “Somebody feels that they are not being paid fairly, or somebody feels that somebody else doing a similar job is getting bette[r terms. This directive is really trying to bring better structure around what you pay, your pay decisions, and how you overall compensate your people.”
Leadership, not just compliance
The contrast with the continent is sharper than many Irish employers might expect. Robbins Rynne described a conversation with her company’s sister offices in Belgium and the Netherlands, where colleagues were startled to learn that salary is typically treated as confidential information in Irish workplaces.
“When you have a pay scale in place, everything complements each other”
“In Ireland, we do not sit around the water cooler discussing salary,” she said. “I told them that, and they were like, ‘What? No, everybody knows. We have always been really open about salary.’“
One of the directive’s central ambitions is to narrow the gender pay gap by addressing one of its less visible causes. Research consistently shows that men are more likely to negotiate salary increases than women, allowing differentials to accumulate over time without any deliberate intent.
“Sometimes you do not actually, on purpose, have a gender pay gap,” said Robbins Rynne. “It is just something that has happened over time. When you have a pay scale in place, everything complements each other.”
The informality of how pay has historically been decided in Irish SMEs is a theme that surfaces quickly in any conversation about the directive. Sheppard describes the existing landscape with candour: pay ranges that exist only in someone’s head, salary uplifts granted when an employee threatened to leave, and no documented rationale that could withstand scrutiny.
“There’s probably a lot that companies are doing right now. It is just that they do not have it documented,” she said. “It is not a systematic approach to how they have made their decisions. And this directive is saying you need to do that.”
Robbins Rynne puts the scenario more directly: a small company may well already pay people according to experience and responsibility. The problem is that nobody has written it down. A sales firm that pays a junior representative 30,000 euros and a senior one 40,000 euros on the basis of years of experience already has a grade structure in practice. It simply needs to name it.
“You are probably doing it anyway,” she said. “You just need to spend a couple of minutes thinking about what way you are doing it, and be transparent about it.”
Where the work becomes harder is in cases where pay differentials arose not from any structured rationale but from the negotiating confidence of the individual involved. “John is paid more because he asked for more money,” Robbins Rynne said. “That is not defensible.”
One anxiety running through the Irish SME community is the prospect of a sudden revelation: that on the day the directive takes effect, colleagues will immediately demand to know each other’s precise salaries and that long-standing arrangements will unravel.
Sheppard says that fear misreads what the legislation requires and how employees tend to respond to new rights in practice. She points to GDPR, which generated widespread alarm that employees would immediately submit subject access requests en masse. They did not. The flexible working code of practice produced a similar reaction in advance, and a similar non-event in practice.
“I do not think you are going to be inundated with requests from staff,” she said. “It is about creating informed decisions.”
Mandatory: Salary info in job ads
What employers will need to do is declare a salary range when advertising a role. Sheppard notes that roughly 34% of Irish job postings currently include salary information, according to data from Indeed. Making that practice universal will produce tangible benefits for employers as well as workers: better-qualified candidates who are genuinely committed to the process and fewer late-stage withdrawals when the offer does not match expectations.
The question of whether existing employees will use advertised ranges as leverage is more pointed. If a company advertises a data analyst role with a range that sits above what current analysts are earning, it is reasonable to expect questions. Sheppard suggests that publishing a range rather than a fixed figure gives employers some protection, provided the structure behind that range is coherent and defensible.
For an SME starting from nothing, both Sheppard and Robbins Rynne recommend the same starting point: focus first on recruitment and the advertising of roles, then work backwards through the existing pay structure to build a framework that can be documented and explained.
Robbins Rynne suggests that job grades do not need to be elaborate. A small company with sales staff, finance staff, and technical developers might simply establish three experience levels within each category and attach salary ranges to each. The criteria should be objective: years of experience, qualifications, specific responsibilities. Where someone sits outside the range for legitimate reasons, such as exceptional corporate knowledge or skills that are genuinely scarce in the market, that reasoning should be recorded.
“That is defensible. That is fine. Logical,” she said. “John is paid more because he has got five years of experience and three degrees and extra responsibility. That is something you can stand over.”
The performance management link is where Robbins Rynne sees the greatest long-term benefit for businesses. Once a framework exists, managers can show an employee exactly where they sit within the grade structure and what demonstrable achievements or qualifications would move them to the next level. The conversation moves from vague aspiration to a concrete plan.
“It is a very clear conversation,” she said. “I want you to progress to the next level, but this is the work you have got to do to get there.”
Both Sheppard and Robbins Rynne are at pains to present the directive not as a regulatory burden to be survived but as a management tool that businesses should want to adopt on its own merits. Trust, retention, engagement and the ability to attract serious candidates are all, they argue, improved by transparency around pay.
Sheppard draws a line between what the directive requires and what good leadership looks like. “Having smoke and daggers around some of these things around pay probably does not help invest in that transparent, engaged relationship with staff anyway,” she said.
She adds that the directive does not prohibit recognising high performers or offering competitive packages to hard-to-recruit senior hires. It asks only that the basis for those decisions be rooted in something coherent. A company that retains a key employee by paying above the standard range is not acting improperly, provided it can articulate why that person’s skills or knowledge justify the premium.
“Coming back to that principle that you want decisions around pay to be fair, equitable and inclusive: good rationale in your decision making is really what the directive is articulating,” Sheppard said.
For the 96% of Irish SMEs that do not yet feel ready, the message from both experts is neither to panic nor to wait. The structures required are, in most cases, already implicit in how businesses operate. salary
The task is to make them explicit, to write them down, and to be able to defend them.
-
Bank of Ireland is welcoming new customers every day – funding investments, working capital and expansions across multiple sectors. To learn more, click here
-
For support in challenging times, click here
-
Listen to the ThinkBusiness Podcast for business insights and inspiration. All episodes are here. You can also listen to the Podcast on:
-
Spotify
-
SoundCloud
-
Apple
