Providing pay clarity and visibility: Getting benefits right for the EU Pay Transparency Directive

Eva Jesmiatka and Valentina Rocchi discuss the inclusion of benefits in the EU Pay Transparency Directive's definition of pay.

The discussion underscores the significant role that benefits play in total compensation, often constituting up to 20-30% of the reward package in many European countries. The speakers address the complexities and practical approaches to data collection, valuation and review of benefits, emphasizing the importance of a well-structured and early data collection process.

Key elements covered:

• Inclusion of benefits in definition of pay: The directive looks at including benefits whether offered in cash or and in kind, recognizing their substantial impact on total compensation.
• Data collection and valuation: Organizations are advised to start early with data collection, considering various sources such as payroll, HRIS systems, and third-party providers. They might need to balance the materiality of benefits and the ease of obtaining data.
• Assessing potential gender biases and pay gaps: The video highlights how benefits even when offered to employees in a consistent manner can lead to gaps in pay. The speakers discuss examples of how differences in benefit choices and post-acquisition benefit harmonization can lead to gaps. It will be important to build an understanding of the current state and analyze if differences can be justified.
• Differences across countries: The materiality of benefits can vary significantly across different countries and companies, influenced by factors such as the quality of state-provided benefits and a company's total reward philosophy.