Operationalizing the EU ‘Right to Information’ for employees

One of the most impactful elements of the EU Pay Transparency Directive is Article 7, which grants employees the right to request and receive information about their pay.

Crucially, when employers respond to these requests, they will need to provide not only individual pay data, but context: information about how the focal employee’s pay compares to the pay of others in similar roles. Essentially, this means giving employees greater insight into the organization’s pay structure.

Meeting these requirements may be challenging, as employers may need to create a new process for fulfilling these information requests. However, since Article 7 is all about increasing pay transparency, it also provides the opportunity to increase employees’ trust in your organization and contribute towards a high-performance culture.

In this article, we’ll offer some points to consider when creating a process to meet employees’ information requests and maximize the Directive’s pay transparency benefits.

• Employees have the right to information in writing about their pay and average pay levels (by gender) for employees performing the same work or work of equal value.
• Where locally permitted or normative, workers can request and receive this information through worker councils or staff representatives. The Article also states: “If the information received is inaccurate or incomplete, workers shall have the right to request, personally or through their workers’ representatives, additional and reasonable clarifications and details regarding any of the data provided and receive a substantiated reply.”
• Annually, employers must inform employees of their right to this information and the steps that they can take to get it.
• Employers must provide this information within a certain timeframe (two months at most, per the Directive, but member states can choose to set shorter timeframes).
• Employees are allowed to discuss their pay.
• If an employee obtains any information about a colleague’s pay, they can use that information only to exercise their right to equal pay.

Designing your pay information request process

If you’re looking to set up a pay information request process, here are some key considerations to drive your process design.

Is your response to Article 7 more proactive or more reactive?

This is an important question to ask early on. A proactive response means sending pay information to all of your employees before they even ask for it. A reactive response involves fulfilling these requests individually if and when they come.

In deciding on your approach, there are two main considerations:

• Volume: How many requests for information do you expect to receive, and how many requests for clarification?
• Readiness: How well equipped are you to handle the requests for information and for clarification?

For example, an organization that anticipates a high volume of requests but has only a medium level of readiness might be well served by a proactive response. This would front-load and streamline the work of generating, compiling, and distributing employees’ pay information and save HR bandwidth for responding to clarification requests.

How will you inform employees of their rights to pay information and the steps they can take?

Per the Directive, employers must advise employees of these rights annually, in a way that is accessible to employees and tells them how to request their pay information.

Employers can choose to do this in a number of ways, including:

• An all-company email.
• An announcement or banner on the employee portal or intranet.
• Content added to the HR policies and procedures.
• A notice included with employees’ printed pay slips.

Whatever option or combination of options you pick, it’s best practice to make sure that these communications line up with your company’s normal communication mode and style.

Will your pay transparency communications need to differ by jurisdiction or area of business?

If your organization operates in multiple EU jurisdictions, then your communications need to reflect the ways in which the Directive is being transposed in each country. Since each jurisdiction is transposing the Directive into local law, some country-level requirements may go beyond the Directive’s minimum guidelines.

There may also be cultural differences between jurisdictions, as well as different workflows, practices, or infrastructure within your organization.

Make sure to address the following questions:

• How similarly are your teams organized across locations?
• What are the cultural or logistical differences between locations or branches?
• How centralized or decentralized is your organization, and how does this inform your approach to communications?
• What communications channels does HR use in different locations or branches, and how can this inform your approach?
• Do communications need to be reviewed and/or approved before they are issued, and if so, what are the steps?
• How should worker councils or other employee bodies be involved in these communications?

How will you ensure that employees’ pay information requests are fulfilled within the compliance timeframe?

To make sure that your system helps you deliver pay information on time, it should do at least five things:

• Log the request received date.
• Track the age of all requests.
• Track the fulfillment date.
• Provide an alert for any unfulfilled requests nearing the deadline.
• Report on request status and fulfillment time.

Here, there will be some crossover with the channel that employees are using to submit pay information requests. Ideally, the channel for employee requests should track the request received date, and information should be easy to export to the back end where these requests are fulfilled.

You’ll also want to make sure that the system notifies or reminds the HR team on the back end when requests are aging to a certain point or nearing the deadline. Lastly, make sure that you can export the data showing when requests were received, when they were fulfilled, and how long it took to fulfill them. This is important for both internal accountability and to document compliance with the Directive.

Although the Directive specifies that employers must respond to these requests within two months, individual EU jurisdictions might decide to set shorter timeframes.

Who will be involved in preparing, reviewing, and sending pay information to employees?

Although the way in which organizations will tackle implementation will vary, here is an example of who may be involved in the process:

1. Compensation & Benefits ensures data completion and accuracy. Together with the communications team members, they make sure that the pay information documents clearly convey the individual employee’s position, the organization’s pay structure, and the guiding pay philosophy. 
2. Communications creates the template for the pay information documents, making sure that positioning and phrasing are in line with the organization’s strategy. They work with the compensation team to make sure that pay information documents are correct, clear, and effective- 
3. HR leads or HRBPs are responsible for converting the blank template into pay information sheets for individual employees. They should understand how the company’s pay structure works and also understand the structure of the organization’s teams.
4. Line managers typically review and generate a pay information document after it is generated by the HR lead or HRBP and before it is sent to the employee. They are often on the front line for follow-up questions and conversations.
5. Worker councils might, in some cases, be entitled to request pay information on behalf of employees. If this is the case in your location, your request process should include a pathway for worker councils, and it’s also best practice to involve the worker council in process development. See our full article for more details.

Frequently asked questions

When an employee’s pay information is compiled, what time period do we use?

In Article 7, the Directive does not specify an exact time period. However, since you want your approach to be consistent, we can look at Article 9, which references data from the previous calendar year. Therefore, we advise considering the previous calendar year for your Article 7 requests as well.

What do we do about new hires, who may not have a year’s worth of pay data?

There is no specific guidance in the Directive for how to handle new hires. A couple of different approaches could be acceptable, as long as you document the calculation method you are using and the rationale for it.

First, you could annualize the new hires’ compensation. For the individual employee, the information provided to them would include their annual gross and hourly gross for the period they’ve been employed. The information would then also include their earnings potential, or the full-time equivalent compensation based on the current rate.

Likewise, when you calculate category averages within your workforce, you would also use annualized data for the new hires. In this case, we suggest that you note the number or percentage of employees with annualized partial-year data on the information sheet.

Alternatively, you could base your headcount calculations on a minimum tenure threshold. In this case, your data would only include employees who have been there for three or six months. If you use this approach, remember that it is important to apply it consistently for all of your data reporting and to document your methodology.

How do we handle job categories where there are only a few employees?

In our experience, five or more employees is a healthy number for a job category. This number ensures statistical validity in your pay equity analysis, and it’s also enough to protect employee privacy.

However, if we have a job category with less than this, there is an inherent privacy risk: any given employee might be able to figure out how much each of their colleagues is making. The Directive calls for us to protect employee privacy in these cases. Article 12, paragraph 3 states that "where the disclosure of information pursuant to Articles 7, 9 and 10 would lead to the disclosure, either directly or indirectly, of the pay of an identifiable worker, only the workers’ representatives, the labour inspectorate or the equality body shall have access to that information."

So when groups of fewer than five appear, the best practice is to merge that very small group with the most comparable group in your data.

If you have to merge groups, then you will need to:

• Keep the category the same for your reporting for Article 9 (point (g)) as well as for Article 7.
• Make sure to document your methodology.
• Keep an eye on the country-level laws, as during the transposition process, some nations might outline specific privacy protection measures for small categories. For example, Sweden’s draft proposal did not adopt the small group exception (Article 12(3)), meaning even if a category has just one or two people, the employer might still have to provide average or comparative pay info.

How beqom can help

beqom’s tools are built to simplify pay equity and pay transparency. Our platform allows you to generate individualized pay information reports with the click of a button. This clearly presented data helps streamline communication and build trust among HR, employees, and managers. Our platform works in all EU languages and can scale from small businesses to complex multinational corporations.