Legislative momentum, shifting social norms and the proliferation of market data have evolved pay transparency from an HR initiative to a boardroom topic. The need to comply with multiple regulatory frameworks around the world and increased employee expectations have compelled organizations to take a more proactive approach to pay transparency.
Organizations are responding to the regulatory requirements and increasing employee expectations by expanding pay-related communications, according to our 2025 Pay Transparency Global Survey results. Responding organizations plan to or are considering communicating pay ranges (28%) and average pay within the same category of work (42%).
On the regulatory front, the EU Pay Transparency Directive (“EUPTD” or the “Directive”), which is currently being transposed by each member state (more information here), is set to launch its first wave of regulatory requirements in June 2026. The requirements, at a high level, are summarized below.
June 2026
June 2027: Gender pay gap reporting for entities with 150+ employees takes effect
Note: Gender pay gap reporting for entities with 100 to 149 employees takes effect in June 2031.
While many details of the final transposed laws remain uncertain, compliance requires significant groundwork. Organizations need to spend time ensuring that they have (1) robust, objective job and rewards structures, (2) robust, objective HR policies and processes, (3) rewards data and analytics capability and (4) a clear and well-documented pay communication approach.
For professional services firms, the development of pay transparency and the Directive present unique challenges. Professional services firms often rely on cohort-based career progression models, which may lack defined, objective criteria as required by the EUPTD even though pay is technically very transparent.
Many firms do not have robust and consistently applied job architectures or career frameworks for non-client facing roles. The absence of defined levels and scope of responsibility makes it difficult to define “work of equal value,” which is a key element to conducting meaningful and defensible pay equity analyses.
Without a structure to effectively define “work of equal value,” transparency can serve the opposite purpose in exposing existing inequities rather than resolving them. Risk could be elevated for firms with open pay systems as well as transparent pay points and ranges without the underlying infrastructure to ensure fair pay and career decisions (e.g., a consistently applied, well-documented and effective performance management system).
Moreover, the business may be concerned about disclosure of pay ranges or structure because they are often closely linked to the firm’s billing rates, which are highly proprietary and often tied to a firm’s internal leverage model and confidential client agreements.
Other complexities regarding billing rates, such as staffing models, utilization targets and negotiated discounts, may result in further challenges in complying with transparency requirements. An unintended consequence of transparency mandates may be a shift in the professional services pricing model, requiring firms to rethink how they balance disclosure with client trust and competitive positioning.
Partnerships have even more unique challenges. As firms move toward more transparent pay policies for employees, it may highlight the opaque nature (as many partners would say, a “black box”) of how many firms allocate earnings to their equity and income (salaried) partners.
This potential bifurcation risks undermining trust and culture in a partnership environment. And, while on the surface equity partners are not under scope of the Directive, there are two reasons why firms should examine the implications on partner earnings more closely.
First, partner earnings transparency has been a focal point since well before the Directive, including not only the outcomes of earnings allocation but also inputs (e.g., metrics, performance assessment), process (e.g., calibration, factors considered), and governance (e.g., approval process and authorities).
In WTW’s most recent partner earnings research report, we found that fairness in earnings outcomes and clarity in performance management are top concerns among partners of professional services firms. A robust and well-documented performance management process builds trust and leads to more defensible/fair earnings outcomes, an approach that aligns with the Directive’s requirement for easy access to information about the criteria used to determine and progress pay.
When asked what would most improve partner pay and performance, professional services firms indicated the following priorities:
Beyond pay transparency regulatory mandates, many partners expect clarity on how earnings decisions are made and the quantitative and qualitative criteria behind them. While quantitative goals such as sales, managed revenue and client billing may be measurable and more easily communicated, it may be more difficult to ascribe discrete values on qualitative contributions such as leadership, collaboration, people development and innovation.
With opaque earnings allocation systems, tension and mistrust build — especially when allocations do not meet partners’ expectations. With many partners increasingly willing to “vote with their feet” this is a pressing and growing challenge for firms to address.
Second, while partners are often categorized as owners of the firm and, therefore, potentially exempt from pay transparency legislations, the definition may not be as clear-cut as one would expect.
For example, non-equity or income partners often are referred to as salaried partners and, despite their partner status, typically are employees of the firm who would be subject to any employment-related regulations. And in some jurisdictions and under specific legal entity configurations, for tax or other reasons, even “equity partners” may be classified as employees and, hence, fall under the scope of pay transparency regulations.
Furthermore, the disclosure approach in one market/country may impact the communication approach to partners in neighboring markets and countries, which can introduce further complexities if EU member states adopt different rules beyond the Directive’s requirements. Getting the scoping of pay transparency right will require in-depth evaluation of each firm’s partnership structure and can be highly disruptive to the partnership if not handled with care.
Done well, transparency can be a competitive advantage, enhancing trust, improving morale and the firm’s ability to attract and retain top talent. Otherwise, it can erode morale, expose inconsistencies, draw legal scrutiny and negatively impact productivity and the retention of key partners.
With the first wave of the EUPTD requirements fast approaching in June 2026, firms with operations in the EU, even in locations where transposition is delayed, must begin to prepare. This means:
