Brace yourselves: Salary Disclosure in Job Listings – Mandatory as of June 2026!

Salary disclosure in job listings, as mandated by the European Pay Transparency Directive (EU/2023/970), is poised to revolutionize recruitment practices across Europe. This blog explores the implications of this directive, its potential benefits, and the challenges it presents for both employers and job seekers. Learn how you can navigate through the upcoming challenges. The transitioning should start now!

Table of Contents:

1. What is changing?
2. What are some benefits for culture?
3. What is the recruitment impact and practices in Austria?
4. Do big businesses have an unfair advantage?
5. What strategies can leaders employ to address salary discrepancies?
6. Conclusion

What is changing?

We recommend having a look at the European Pay Transparency Directive (EU/2023/970). It contains more interesting points related to the salary transparency. In this blog post, let's focus on the Article 5 and Article 6.

The European Pay Transparency Directive aims to promote fairness and reduce discrimination in the labor market by requiring employers to disclose salary details in job listings.⁽¹⁹⁾

Chapter II: Salary Transparency

Article 5: Salary Transparency Before Employment

1. Applicants for positions have the right to receive information from prospective employers regarding:
   1. a) The starting salary for the position or its range, based on objective and gender-neutral criteria; and
   2. b) Any relevant provisions of the collective agreement applicable to the position.
2. Employers must provide this information in a manner that ensures informed and transparent salary negotiations, such as through a published job advertisement, before the interview, or by other means.
3. Employers are prohibited from inquiring about applicants' salary history in their current or previous employment.
4. Employers ensure that job advertisements and job titles are gender-neutral, and recruitment procedures are conducted in a non-discriminatory manner to uphold the right to equal pay for equal work or work of equal value.

Article 6: Transparency in Salary Determination and Salary Development Policy

1. Employers provide their employees with information on the criteria used for determining their salaries, salary levels, and salary development in an easily accessible manner. These criteria must be objective and gender-neutral.
2. Member States may exempt employers with fewer than 50 employees from the obligation related to salary development under paragraph 1.

What are some benefits for culture?

It is a benefit and a challenge at the same time. There are challenges from salary discrepancies between new hires and existing employees. This problem already exists. But with the new directive this discrepancy becomes transparent: Salary discrepancies can lead to internal conflict, as existing employees may feel undervalued if new hires receive higher salaries. Negotiations may also become more complex as candidates negotiate based on disclosed salary ranges.

Companies who had a competitive salary model and didn't allow salary discussions now need to switch to a different salary discussion. The open salary discussion. Now we need to encourage people to talk and discuss their salary.

See how not to do it in the example that Ben Askins is bringing up:

What is the recruitment impact and practices in Austria?

In Austria, where salary disclosure is already mandatory since March 2011 under the goal to create gender equality. Here we know, that job descriptions have to have the salary mentioned equal to the minimum amount of what is being offered.

Still we face challenges, that organisations report:

• The disparity between existing employees and new hires is not necessarily resolved. However, the transparency is available, that enables organisations to improve.

• Even though the law is active since 2011, there is no significant change in the salary discrepancy between men and women in Austria. But we do hope for a change for the greater good. Note, that the salary growth can be impacted by many things and perhaps those correlations hide the significant change from the Austrian law.

However, Austrian organisations have adapted to new culture of transparency and structured their salary ranges. We will discuss the biggest points as followed.

Do big businesses have an unfair advantage?

Small business want to stay competitive in relation to bigger businesses. This is understandable. We think that small businesses in itself are very much valuable and attractive to candidates, because of their size and their unique culture. Here is what small businesses can do to stay competitive:

Small businesses can focus on highlighting non-monetary benefits such as flexible work arrangements, opportunities for growth and development, and a positive company culture. Emphasizing the unique advantages of working for a smaller organization, such as greater autonomy and a closer-knit team, can help attract candidates who value these aspects over higher salaries. What is attractive as well are topics such as broader use of skillset of employees and the flexibility bigger organisations dare to try out, such as working from home and working from anywhere. Often smaller organisations have a tendency to be closer to the customer or user, which gives a better aspect for working agile and being able to react on the market on time.

What strategies can leaders employ to address salary discrepancies?

Engineering leaders, hiring managers, HR can prioritize transparent communication about a structured role and level definition with their salary ranges defined and the factors that determine compensation. By clearly articulating the value proposition of the role and the organization, they can attract candidates who align with the company's mission and culture, rather than solely focusing on salary. Additionally, offering competitive benefits packages, such as professional development opportunities, remote work options, and comprehensive health benefits, can help offset lower salary offerings and attract top talent.

Conclusion:

The mandatory disclosure of salaries in job listings represents a significant shift in recruitment practices in the EU, with the potential to enhance fairness and transparency in the labor market. While challenges exist, proactive measures by employers and HR departments can help navigate these changes effectively. As organizations prepare to implement salary disclosure requirements, it is crucial to prioritize transparency, fairness, communication, and compliance to ensure a smooth transition. For further insights into the impact of salary disclosure and best practices in recruitment, explore additional resources and expert opinions in the field.

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