Pay transparency is always a discussed topic amongst internal recruitment functions and will come into sharper focus with the introduction of the EU Pay Transparency Directive this year.
While the Directive doesn’t directly apply to the Channel Islands, as they’re not part of the European Union, it’ll no doubt have a wider reaching impact, particularly for companies that have a presence in both Europe and the Channel Islands who may want to integrate their processes for a more streamlined operation.
With this in mind, we’re exploring the pay transparency directive, what this may mean for the Channel Islands and why employers across both Jersey and Guernsey may need to reconsider their practices over the long-term.
What is the EU Pay Transparency Directive?
The EU Pay Transparency Directive, initially passed in 2023, is a new piece of legislation designed to ensure ‘workers receive equal pay for work of equal value regardless of gender’, driven by policies around pay transparency, the gender pay gap and company reporting.
EU member states, and the businesses within these states, have until June 7 this year to introduce these requirements into local law/company policy or face punitive measures.
The Directive applies to EU companies with 100 or more employees, including those employed on a part-time or contract basis, and covers two key pillars: pay transparency and pay equity.
On a practical level, companies impacted by the Directive will be required to change the way they build pay structures, revise how they communicate pay structures to employees/applicants and may need to give targeted raises to ensure there’s no gender pay gap.
Explore Salary Benchmarking with our Guide
How might the EU Pay Transparency Directive impact the Channel Islands?
While this piece of legislation doesn’t directly include the Channel Islands, it may impact employment and recruitment practices around the islands, especially as larger businesses look to integrate new policies at a broader level.
There’s a multitude of businesses across the Islands that also have operations across the EU and it’s not a stretch to imagine these organisations adopting an integrated approach, introducing these new pay transparency practices across all of their jurisdictions at once.
This would guarantee consistency, mitigate any risk of discrimination and address the potential of gender pay gaps, all without disrupting day-to-day operations.
For employers, and recruiters, across the Channel Islands, it’s important to start considering how this might impact job advertising, internal hiring and staying competitive in the local market.
What might employers need to do?
If you’re an employer in the Channel Islands, the following practices may be useful:
Revisit your pay structures
As part of changes around pay transparency and equity, your business should be exploring how much you’re paying different employees and why you’re paying what you are. It’s important that you keep things internally consistent and if possible, backed up by data.
Salary benchmarking is a great way of building out a new pay philosophy and can help you maintain a consistent approach. Our free Salary Guide is the ideal tool for supporting salary benchmarking and can be downloaded here.
During this process, employers also need to make sure they’re using gender-neutral criteria whilst determining pay scales, instead referring to qualifications, experience or responsibilities. While this may already be the case, you need to be clear in how you articulate this to the wider world.
Provide more information around salary and compensation
A major part of the Pay Transparency Directive is around businesses taking accountability for reporting on both individual and average pay levels.
Employers are required to provide ‘clear and complete information’ around pay, broken down specifically by gender, category of worker and the value of their work in an effort to address gender pay gaps.
Stakeholders are encouraged to identify and ensure that current employees fit into specified pay ranges and that they’re appropriately positioned within that salary range based on their experience, skill set and qualifications.
There’s also more emphasis on external reporting, with companies now required to disclose their overall gender pay gap alongside additional data around raises or bonuses.
Expect more open conversation around salary
Businesses should consider being more direct and open in conversations around pay structure. Employers should expect to have more frank conversations with employees around their compensation and why they’re paid what they are.
Although this may be a challenge initially, it’s a much more transparent approach that encourages employee empathy, supports employee retention and underpins business growth.
