Abstract
A pressing question facing many firms today is whether to disclose pay information, what specific details to disclose, and to whom this information should be revealed. Despite the relevance of pay disclosure in practice, the perspectives of practitioners on this topic have received little attention from academics. This article provides a forum in which practitioners share lessons-learned, best practices, and implementation challenges associated with pay disclosure. The forum assembles contributions from compensation specialists, employers and worker representatives from Austria, Germany and Switzerland, and displays the heterogeneity of attitudes toward to pay disclosure. We hypothesize that these differences are closely linked to variations in corporate culture, particularly in relation to the levels of trust and employee empowerment within organizations. The practice forum offers a first step for a dialogue between practitioners and scholars working in the area of pay disclosure.
Introduction
Pay disclosure has emerged as a prominent issue in the labour legislation of various countries, as well as the voluntary practices of some organizations. This goes hand in hand with the increasing relevance in the corresponding academic literature on the issue. The complexities surrounding the design of pay disclosure policies and their implications for both employees and organizations remain largely unresolved, prompting scholars to advocate for further research on this subject (Arnold and Fulmer, 2018; Bamberger, 2021; Brown et al., 2022; Lam et al., 2022; Marasi and Bennett, 2016). This scholarly appeal has been echoed in various platforms, including a recent call for papers for a special issue of the German Journal of Human Resource Management, to which this article contributes. While research in this area is expanding, it may still lag behind the current pay disclosure practices prompted in part by new regulations in organizations. In such cases, insights and experiences from practitioners can significantly enrich academic debate and provide inspiration for relevant research questions in the future. In their introductory piece, Brandl et al. (2025) identify novel developments within the current landscape of pay disclosure and discuss what these developments imply for HRM research. Therefore, to bridge scholarly and practitioner perspectives, we complement the academic papers in this special issue with practical insights, creating a platform for dialogue between research and practice.
This contribution brings together the viewpoints from practitioners from Austria, Germany and Switzerland. Patrick Mollet, in Section “Success Factors for Introducing Pay Transparency at Great Place to Work (Patrick Mollet, co-owner and consultant).” reflects on the reasons behind the extensive pay disclosure practices in a Swiss consulting firm, Great Place to Work, and based on their learnings suggests careful steps toward increasing pay disclosure for organizations. Pay disclosure is also pro-actively, though less extensively, practiced at Der Europäische Hof Hotel Europa Heidelberg GmbH. Managing director Caroline Kretschmann (Section “The ‘both/and approach of pay disclosure at Der Europäische Hof Hotel Europa Heidelberg GmbH,” Caroline Kretschmann, Managing director discusses their “both/and” approach regarding pay disclosure, which assumes as much transparency as possible, as much secrecy as necessary and considers the important role of trustworthy management. Compensation specialist Philipp Gerlach (Section “Pay disclosure: High expectations, many unanswered questions,” Philipp Gerlach, Compensation manager in a multinational corporation) recommends caution with pay disclosure in multinational companies, weighs up concerns and opportunities of pay disclosure from an employer perspective and provides insights on some potential unintended consequences of pay disclosure. In Section “The Austrian Public Policy Perspective on Pay Disclosure (Ingrid Moritz, until July 2023 head of the women and family department in the Chamber of Labour of Vienna),” Ingrid Moritz, retired head of the women and family department in the Chamber of Labour of Vienna, examines the implications and ongoing challenges posed by Austria’s Equal Treatment Act, and based on learnings from negotiation and implementation of Austrian laws on pay disclosure, provides suggestions for the implementation of the new EU pay transparency directive going forward. Overall, the contributions provide interesting insights on how employers can navigate pay disclosure pressures from the state, employees and the labor market.
Practitioners’ contributions presented below support the notion that attitudes toward disclosing pay information and organizational implementation approaches considerably differ across contexts. For example, as many legal requirements primarily target medium to large enterprises, smaller firms are less encumbered by such regulations. However, although smaller organizations may be forced to implement some level of pay disclosure to a lesser extent, they may decide to do so to differentiate from competitors on the labor market. Corporate culture plays a crucial role in shaping these attitudes, too. Companies that foster a high level of trust between management and employees, as well as among employees themselves, may be more open to disclosing pay information. Similarly, organizations that emphasize employee empowerment and autonomy might find greater alignment of their HR strategies with extensive pay disclosure practices. There are, as well, significant differences across contexts in the role of labor and trade unions that will affect the implementation of pay disclosure. The heterogeneity of insights and questions posed by practitioners in this contribution indicates that conditions and outcomes of pay disclosure are highly context sensitive. For example, the contributions highlight the potential for significant opportunities, such as more effective recruiting, greater trust, and closing gender pay gaps, along with significant risks, such as pay compression, increased compensation costs, greater public scrutiny, and questions about the ability to reward and retain star employees. We conclude therefore that understanding how context influences if, when and how pay disclosure is implemented and which with consequences for organizations and employees constitutes a fertile ground for future research.
Success factors for introducing pay transparency at Great Place to Work (Patrick Mollet, co-owner and consultant)
This is the story of how Great Place To Work introduced pay transparency and ended up with self-set salaries. It is also the story of a topic that is no longer even a topic for us internally. Nowadays, I talk about pay transparency externally much more often than we discuss it internally.
From self-organization to pay transparency
When the name of your own company is “Great Place To Work”, this is an obligation. As experts in workplace culture, we want to be a role model for our customers and anticipate developments. Plus, part of our vision is to be a great place to work for ourselves. That is why we are constantly thinking about how we can further develop our organization and, in particular, our culture. We started with a very traditional setup when the company was founded in 2008. The company grew steadily, and by around 2017 we had reached a size of 10–12 employees, requiring more structure. The initial response was to introduce an additional management level. However, we quickly realized that none of the existing team wanted to take on a management role and that no one felt that they needed to be led by a team leader. This was the same time when self-organization was becoming a hot topic in HR circles. Concepts such as sociocracy and holacracy were being discussed, and the first examples of self-organized companies were doing the rounds. For us, this was the impetus to try out this form of organization. In spring 2018, we made the definitive switch to self-organization. This history is important for understanding why pay transparency was the logical next step for us. As in almost all organizations, our salaries were not disclosed at first. This wasn’t a conscious decision; it was just the norm.
In general, all HR issues still ended up in our “Owners Circle,” consisting of the shareholders. But self-organization requires transparency. Only then can all employees act independently and in the best interests of the organization. This is particularly true of finances. As a consulting firm, salaries account for 80% of our costs, so if this cost block is not transparent, no real discussion is possible.
In 2019, we therefore decided to make salaries transparent for everyone. For the Owners Circle, in fact, it was less a question of what this would trigger, or whether it would lead to envy and resentment—for we were convinced that we paid fair salaries and could explain every salary difference. It was therefore more a question of whether our employees wanted this transparency at all, until we realized that some employees were already quite open about their salaries. We therefore informed the team of our intentions and asked them for feedback. Of course, we also gave them a right to veto, for salaries must not be made transparent against the will of the employees concerned. As it turned out, the entire team supported our plans.
The big moment came when I pragmatically showed the Excel list with all the salaries on the big screen at our monthly team meeting. To be honest, I suddenly felt nervous before this meeting. Because even if we felt that the salaries were fair, that didn’t mean that the employees would see it the same way. Fortunately, there were only a few questions to help them better understand the salaries. After 10 minutes, the agenda item was completed, and we moved on to our ordinary daily business.
Since then, pay transparency has no longer been an issue for us—it is now part of our cultural DNA, and it has never been questioned or discussed in any other way. It is clear to all that salaries are just as transparent as office rent or income from a project. New employees are also made aware of this from the first job interview.
Advantages of pay transparency in practice
The most important advantage for us has been increased trust in our organization and thus a stronger culture. Transparency enables us to communicate clearly to our employees that we have no secrets and nothing to hide. It is clear that we strive for the fairest possible salaries and that no one receives preferential treatment. “Act with Integrity” is one of our corporate values, which we are reinforcing here. Radical transparency also shows that we trust our employees by giving them access to all information. This trust-based workplace culture is an important driver of employee satisfaction and engagement.
Pay transparency also forces us to be as fair as possible. Of course, fairness is highly subjective, and absolute fairness is impossible. However, transparency automatically eliminates many pitfalls that can lead to unfairness. Salaries are not negotiated in private between two people; they must be able to stand up to the whole team. Pay transparency has also naturally led to pay compression (i.e., a reduction in the pay gap). Since the introduction of pay transparency, we have continuously raised low salaries, whereas the highest salaries have remained relatively stable.
A third practical advantage can be seen in recruiting. We demonstrate our internal pay disclosure to the outside world by publishing the pay range in the job ad; this pay range is discussed and defined internally within the team before being listed. We hold an open discussion about what qualifications and experience we are looking for and what we consider to be fair payment. This way, the team also sees that we are not hiring new employees at higher salaries.
On the other hand, publishing the pay range in the job ad helps us to approach candidates with realistic salary expectations: If someone is expecting a much higher salary, there is no point in them applying to us. Even if someone’s skill set is currently lower than what we are seeking, they will understand that our expectations for this position are obviously higher than what they can bring to the table. In addition, this transparency enables us to address payment right from the start of the recruitment process. In traditional job interviews, this topic is always pushed to the last few minutes, and the question is whether the recruiter or the applicant brings it up first. It also leads to tactical maneuvering for good negotiating positions. Our pay disclosure approach does away with all of this.
In conversations with other organizations, I also notice that we invest much less time and energy in the topic of pay. In traditional organizations with pay secrecy, salaries appear to be a constant and emotionally charged issue. This is because, as humans, we naturally look for clues to assess the fairness of pay. According to research, we overestimate the pay levels of our peers, which leads to latent dissatisfaction. This all disappears with pay transparency.
Our learnings and recommendations
Our most important realization is that pay transparency is not a stand-alone initiative; it requires the right foundation and a mature culture. For us, it was a logical consequence of self-organization and employee empowerment.
A highly transparent culture in general is a necessary prerequisite for pay transparency. You can’t introduce pay transparency when most other information is restricted to a need-to-know basis. Instead, you must first think about why you are not already transparent today. What are you afraid of? Are these fears still present and relevant? It was once taken for granted that salaries were a private matter between an employer and their employee. However, younger employees in particular no longer see it in such narrow terms.
In any case, employees must be involved in the process. They should understand the aim of the transparency initiative and how it relates to other People and Culture measures. It is also important to address any fears and concerns employees may have. Under no circumstances should pay transparency be introduced against employees’ will (in addition to being unethical, this is also strictly prohibited under labor law). When I talk to managers about pay disclosure, I often sense a great deal of fear. In particular they fear envy, resentment, and a bad atmosphere. In truth, this is an admission that their salaries are not fair and that the differences cannot be rationally justified. I have spoken to many organizations that have moved toward more pay transparency, and none of them have experienced negative effects. But all of them also emphasized that their salaries are based on an objective compensation system that makes pay differences comprehensible.
This brings me to the most important insight and recommendation: For the majority of organizations, abruptly posting a list of employees’ salaries on the intranet or on the notice board is not the right approach. Instead, a gradual introduction is recommended. This helps prepare the culture and gradually introduce employees to the topic:
• Step 1: Establishing pay fairness
As already mentioned several times, pay fairness is the absolute basis that must be in place before salary transparency is introduced. If historically grown discrepancies exist, these must be addressed proactively.
• Step 2: Communicating the compensation model
Before you make salaries transparent, you should show employees the model being used to calculate salaries. This allows employees to understand how factors such as education, professional experience, tenure, seniority, and managerial level are assessed and remunerated.
• Step 3: Communicating salary bands
Based on a robust compensation model, the salary bands for the various roles can be defined and communicated internally, but individual salaries are not yet communicated. However, each employee can check for themselves where they are within this pay band. Ideally, it is also clear what is required to reach the upper end of the pay band.
○ Step 3a: Communicating salary bands in job ads
More and more organizations are also communicating these pay bands externally in their job ads. I have already outlined the advantages of this in the recruitment process above.
• Step 4: Establishing voluntary pay transparency in teams
Pay transparency can also be tested voluntarily at the team level, especially in large organizations. Perhaps there are teams where the culture of trust is particularly strong or where the pay differences are particularly small. In this way, experience can be gathered in a controlled environment.
• Step 5: Implementing pay transparency in all parts of the organization
Only when the previous points have been fulfilled, and the foregoing steps have been taken, can pay transparency be implemented in all parts of the organization.
Experience shows that steps to more pay transparency are most commonly practiced among smaller organizations in the consulting, marketing and IT industries. These organizations traditionally place great value on culture and, due to their size, enjoy close relationships with their employees. However, there are also numerous examples of large organizations that are moving toward pay transparency; their focus is more on disclosing their compensation model and their pay bands.
However, I am confident that many more organizations could easily make their salaries transparent—particularly in sectors such as hotels, restaurants, healthcare, retail and construction, where collective labor agreements are in place and few pay differences exist.
Our next chapter: Self-set pay
After several years of positive experience with pay disclosure at Great Place To Work, we took the next step two years ago: We decided against an elaborate compensation model and instead opted for self-set pay. Pay fairness is highly subjective and no committee or model can define what fair pay means for every employee. As a result, we now conduct an annual pitch process, during which all employees pitch their pay and argue for any increases. The pitches are then discussed in the teams with various feedback loops and ultimately must be approved by the entire team.
The “both/and” approach of pay disclosure at Der Europäische Hof Hotel Europa Heidelberg GmbH (Caroline Kretschmann, Managing director)
A remuneration system that is perceived as “fair” is crucial for employee satisfaction and loyalty, identification and peace of mind. However, developing such a system is just as complex as determining the appropriate communication of the system.
In our thirrd and fourth generation privately run family business, the Europäischer Hof in Heidelberg, we have developed a remuneration system in which employees understand how salaries are calculated and what is necessary to achieve certain adjustments. It is important to us that every employee receives the same payment for the same and equivalent work under the same conditions, while at the same time reflecting the differences in a fair relationship to other activities in the company. Career paths have therefore been defined for each area of responsibility—from the kitchen to service to the banqueting area - which not only specify the corresponding salaries, but also differentiated criteria for the fields of professional competence, work organization, communication, conflict management and leadership, as well as the time periods for reaching the next career level.
The criteria of communication, conflict management and leadership apply equally to all areas of activity and thus ensure comparability and fairness between different areas of activity. For the kitchen, for example, we have defined eight career levels: Commis de Cuisine, Demi Chef de Cuise, Chef de Partie, Junior Sous Chef, Sous Chef, Head Chef and Kitchen Director. In this way, we create a comprehensible and reliable framework for colleagues in all areas, which takes individual qualifications, skills, experience, performance contributions and the degree of responsibility taken on into account appropriately for promotions and pay setting and is an important tool for personnel development overall. A special feature of our company is that we do not pay individual bonuses or premiums in addition to the differentiated fixed salaries. In our experience, individual bonuses promote competitive thinking instead of teamwork, they neglect important but difficult to quantify aspects such as team support or cooperative information, they focus on short-term incentives instead of long-term strategies and support a questionable view of human nature that assumes that employees work better when they are rewarded or punished. Furthermore, in complex working environments such as a hotel, it is difficult to evaluate the contribution of an individual in isolation. Individual bonuses counteract a cooperative corporate culture, which is an important part of our empathetic and value-oriented corporate philosophy. Instead, we give employees a share in the company’s results. 10% of the overall result is distributed to the team and every employee receives the same amount, i.e. the area manager receives the same amount as the dishwasher. We know that everyone is essential if we are to be successful as a whole.
In terms of the communication of this system, we have found a sensible way of combining valuable transparency and helpful secrecy. Valuable transparency with regard to the comprehensible communication of career and pay levels, the requirements for positions and jobs and the opportunities and time frames for achieving them. In this way, we create acceptance and can avoid mistrust and incorrect pay assessments due to ignorance. Transparency relates to the underlying collectively agreed salaries per level, i.e. employees know what pay increases can generally be expected at the higher levels. However, as we also give bonuses above the pay scale, they are pleasantly surprised when they are promoted. Helpful discretion, on the other hand, with regard to the salaries and wages of specific employees. We have learned that a direct comparison of individual salaries often leads to envy, resentment and dissatisfaction. This is due to a frequently distorted and selective perception of one’s own and colleagues’ performance (“He just sits in front of his computer all day while I work here in the kitchen”), personal evaluation preferences that sometimes vary greatly (“Is sales even necessary? We do the work here in service!”), subjective assessments (“X can’t do anything”) and asymmetrical information (“Purchasing doesn’t know what work is required in housekeeping and how it is processed”). Avoiding the disclosure of specific salaries also ensures privacy. Not everyone feels comfortable if everyone knows his or her pay. In addition, conflicts often arise over pay (e.g. lack of appreciation, inefficient duty scheduling) that have nothing to do with it and cannot be resolved through remuneration.
For us, this “both/and” approach is a successful one that maintains a harmonious and cooperative working atmosphere. This approach is embedded in a deeply rooted culture of trust, in which employees have experienced for generations that a fair and holistic remuneration structure and responsible and reliable handling by the management form a good basis for cooperation. Our colleagues know and trust us that we do not make any significant deviations from our system. For example, we do not buy in new employees with higher salaries or promise existing employees pay increases that go beyond the system if they tell us that they will otherwise leave us. We do not give in to this pressure in order to maintain the remuneration structure for reasons of fairness. This has paid off for four generations. Our magic triangle of remuneration design and communication is therefore: as much transparency as possible, as much secrecy as necessary and balanced by trustworthy management.
Pay disclosure: High expectations, many unanswered questions (Philipp Gerlach, Compensation manager in a multinational corporation)
The hopes and expectations associated with pay disclosure in general are high. Pay transparency, it is believed, will help to close the gender pay gap, and it will facilitate also the fight against other forms of pay discrimination. Overall, pay transparency will represent a major step forward in the effort to achieve greater fairness in remuneration, finally to promote pay equity.
However, whether all of this will actually materialize depends in particular on how corporations react to the new legal requirements and increased expectations on pay transparency. What opportunities do large corporations see when it comes to pay disclosure and which concerns do they have? What might in the end be the impact of pay transparency on pay determination processes and outcomes?
I would like to contribute to answering these questions by providing an assessment based on my personal experience and insights as someone who deals with compensation on a daily basis in a large, multinational corporation. I will start with explaining some concerns corporations have linked to the topic, followed by the opportunities they see. Then, I will address how corporations actually react to increased demands for disclosing pay. Finally, I will give an assessment—which is necessarily speculative—of how realistic the expectations associated with the topic are.
Concerns of companies
The most obvious and immediate concern corporations have when it comes to pay transparency is—at least in the short run—cost increase caused by pay disclosure measures. Most external candidates will locate themselves on the upper half of the pay ranges included in a job posting. Knowledge about the average salaries of colleagues with comparable jobs (for example obtained because of one’s right to information) will lead to complaints only from those employees who earn below the average or who feel underpaid even when they earn at average. No one who finds out that he or she earns way above the average will ask for less. A company that decides to share information internally about the average salaries of several categories of employees (maybe as part of their pay transparency strategy and because they believe pay disclosure boosts employee motivation) will in a similar way receive objections only from those employees or employee groups who feel treated unfairly. Regardless of which pay disclosure measure one thinks of, no one will ask for less because he or she finds themselves at the upper end of the pay distribution or simply above the average. And it is anyhow hard to imagine that someone’s compensation package would be reduced as a consequence of such a pay disclosure exercise. But opposite to this, many employees will feel unfairly treated and ask for pay raises, even if there might be legitimate reasons for them being paid below other colleagues. This effect could possibly weaken somewhat in the long term (which is not guaranteed), but at least in the short term, immediately after the introduction of pay transparency measures, considerable cost increase is feared by corporations.
And it is not only about direct cost for higher salaries, bonuses and equity grants that corporations are afraid of. Additional rewards professionals will be needed to handle pay disclosure measures and tools, and to fulfill reporting requirements. Also, investment in job architecture, pay equity software platforms, external consultants and especially in the firm’s HR information systems might be necessary to meet all the demands associated with the different variants of increased pay transparency.
Set aside the potential cost impact, pay transparency will increase the need to explain and justify pay differences. Even if a majority of employees accept at least for the moment once identified patterns of pay inequalities, some of the employees would make new demands based on the information now available and ask for justification. This might lead to endless and tiring discussions and would definitely increase the effort for line managers and HR professionals, maybe even become a burden. In any case, pay disclosure measures, especially if they go beyond the legal minimum, require a fundamentally revised approach to how remuneration should be communicated, explained and discussed with employees. And this is a second important factor why many companies shy away from pay transparency at first.
From a theoretical perspective, pay disclosure opens up spaces and opportunities for criticism (of pay inequalities), while increasing the demand for their justification in terms of legitimate reasons for compensation differentiation (Boltanski and Thévenot, 2006). And in modern organizations, the only legitimate reason for unequal treatment is first and foremost: merit. With disclosing pay, corporations will need to refine their vocabulary of merit and performance to justify existing pay differentials. Because differences in compensation become clearer, also the need to justify them becomes more obvious. Transparency on pay will also enforce a formal mode of decision-making on compensation. Since only formal knowledge which is measured and documented counts, subjective and informal knowledge runs the risk of being perceived as illegitimate and cannot justify compensation differences anymore.
It is also not clear what comes after an initial move toward pay transparency. Transparency alone will not do it. Without additional budgets to correct identified imbalances and purely relying on the regular annual merit budgets, the revealed picture might reinforce perceptions of unfairness, worsen the corporate or team climate and damage employee motivation.
When every discretionary compensation related decision is at risk of being scrutinized, questioned or attacked, managers and HR will react by avoiding differentiation and hiding behind more and more supposedly objective criteria, rules and processes. It will be more difficult to reward and motivate outstanding employees and top performers crucial for the firms’ success since the compensation systems will become more bureaucratic, slower and less flexible. The consequence would be pay compression and less possibilities to incentivize individual employees’ behavior. By shying away from differentiation and discretion when it comes to salary increase, annual or special bonuses and equity grant decisions, managers and the company as a whole would lose part of its steering capability.
Corporations are, to sum up, mostly concerned about cost increase and bureaucracy as potential consequences of pay transparency. But many corporate actors also do see the other side, potential positive effects of pay transparency on the external appearance and perception of the company, on the satisfaction and motivation of employees and the potential to advance initiatives and goals in the area of diversity, equity and inclusion.
Opportunities seen by companies
Pay secrecy has been the rule in most companies. Employees compensated under collective bargaining agreements and the corresponding pay scales are to some extent an exception, since for them—while the individual compensation is not fully transparent—the discretionary scope for decisions is usually limited. With several legal initiatives requiring different forms of pay disclosure under way, many compensation professionals start thinking about what the concrete effects and consequences of pay transparency could look like. To what extent could it have a positive effect on desired outcomes, for example, the employer brand and value proposition, the satisfaction of employees with their compensation and consequently their overall satisfaction and performance? And could certain transparency measures make it easier to achieve goals on the corporations’ diversity, equity and inclusion agenda?
While the concerns are definitely there, and it is not clear how potential negative effects could be minimized, the opportunities of pay transparency are also gradually being recognized (McMullen and Dahle, 2024: 77).
The publication of pay bands with every job ad includes several potential advantages. First, the pay range gives to the candidate an indication of how senior a certain position is and if the position is of interest. Often, the job titles in job postings are somewhat arbitrary (maybe less so in the United States) and do not convey a clear signal for which level of seniority a firm is searching. A pay range would make it more precise what kind of candidate the company is looking for and the search process could become more efficient.
Publicly visible pay ranges, but even more the public recognition of a company for fair and transparent compensation practices, have the potential to attract employees. Many employees are concerned that they are unfairly paid and wonder about their colleagues supposedly higher compensation. But the question is to which extent public recognition as employer with transparent compensation would be a decisive advantage in the competition for talent with other companies that provide less transparency. If they had to choose, higher pay would probably still be more important than transparent pay to most employees. Also, the question is if emphasis on pay transparency would necessarily attract the right employees. It might as well sound particularly attractive to employees looking for a rather comfortable job where pay rises are more or less guaranteed, regardless of individual performance. But even if such effects cannot be ruled out, there definitely is a growing desire on the part of many employees to get more information on the compensation of similar jobs, but also about pay progression, be it along performance, seniority or levels. And revealed compensation information will in many cases be much less spectacular that what many employees had thought of before. Sure, there are outliers. But in many cases, employees would find themselves relatively close to the average or median salary for their job. And the awareness of being paid fairly and appropriately is, in my opinion, crucial for the motivation and commitment of employees.
The problem is just—and let’s be realistic here—compensation is and very probably will remain one of those topics where employees disagree most if they are treated fairly or not. Everyone would like to earn more, and many employees feel that they contribute more and therefore also deserve more than other colleagues or that their superior earns too much. If the compensation of an individual or a group of employees is adequate will always remain a topic of discussion and disagreement—also because this discussion takes place within corporations in contexts of conflicting interests and unequal power distribution. And no measure of transparency will change this.
Many companies take their diversity, equity and inclusion agenda serious. They really would like to have a diverse workforce in senior roles or have more women in top management. And no matter what is their effect on the public image of a firm or employee motivation, pay disclosure measures have great potential to advance several equity goals, especially to close the gender pay gap.
When treated as an integral part of a global total rewards strategy, the right pay disclosure measures can create significant advantages for companies. This implies to treat pay disclosure as part of a broader strategic approach of how to communicate rewards to employees and to treat it in a proactive manner, not merely reacting to ever new legal requirements. Ideally, employees will better understand their remuneration and perceive it as fair, which in turn has a positive effect on their motivation and performance. The great challenge for corporations is to choose a mix of pay disclosure measures that are suitable for this purpose and at the same time avoid the undeniable dangers: cost increase, unflexible and bureaucratic compensation systems and demotivated employees. So, the stakes are high—and while there are potential gains, there are also substantial risks. And there are many unanswered questions about what suitable pay disclosure measures are, how to implement and manage them best and under which conditions the advantages outweigh the disadvantages. My estimate is that we therefore will also see only gradual steps toward pay transparency, driven more often than not by new legal requirements. And no matter of how executives and HR professionals view the topic as a whole, they will need to respond to the legal requirements, but also to the increasing attention and pressures, both from inside and outside the company.
How companies will react to demands for transparency?
Largely independent of how companies assess the ratio of opportunities to risks linked to pay transparency in their singular case, and regardless of how proactively a company will decide to address this topic, there are some general trends of how corporations react that seem very likely.
The first impact concerns what large companies often refer to as job architecture, basically the system of how to classify jobs into job families and levels. An infinite number of variations are possible, but in the end, it always comes down to creating a number of functional categories (e.g. engineering, sales and marketing, finance, etc.) and levels to group similar jobs, to make jobs and employees comparable. Most large multinational companies have such job architectures in place, but they will come under more pressure. Many pay disclosure measures are directed at groups of comparable jobs. Pay ranges have to be published in job ads and pay ranges will be defined or derived from a group of comparable jobs. Internal rights to information are based on some definition of similar jobs. Also, when calculating an adjusted version of the gender pay gap, this means typically calculating the remaining gap looking only at comparable jobs or controlling for job content and job level in more sophisticated analyses. The classification of jobs is also the basis for all types of analytics and reporting activities. You can only provide information about what the available data actually records.
Corporations will pay more attention to their job architecture to make it waterproof and be prepared against criticism. Even more, the everyday decision which job code to assign to a certain position or employee becomes more critical. To some extent, this is already the case right now. But since currently the job architecture is maybe not in all countries or not for all employee segments applied, the consequences of which job one is assigned to are limited and therefore the topic is neglected.
As a result of pay disclosure, corporate job architectures and the activity of assigning jobs and individuals to one of the categories becomes increasingly salient. Categories—be it as hierarchical levels or functional classifications of people, jobs and skills—are a precondition for realizing pay transparency. But these categories are not objective or given from the outset. How these categories are created and who creates them has an impact on pay distribution, just as also the assumptions behind the definition of classification systems and the criteria to differentiate or in/exclude people. Categories are not created in a neutral and objective environment, but in a context of conflicting interests and unequal power distribution. Classification needs to be seen as a process which requires the interpretive work of how to assign cases, here jobs or employees, to different hierarchical levels and functional categories (Thévenot, 1984).
One question that is particularly interesting to follow in this context is how trade unions will enter into this struggle to define the relevant categories. Unions have an interest to maintain the prevailing validity of classifications included in the collective bargaining agreements as the decisive ones, including the corresponding criteria, definitions and underlying principles. It will be intriguing to see how the EU Pay Transparency Directive (EU 2023/970) is going to be implemented in national German law and to the extent to which trade union concerns are addressed by the German lawmaker (European Parliament, 2023). This especially relates to Article 9 of the directive which addresses the gender pay gap by “categories of workers”—while it leaves open the question of who defines the relevant categories.
There is another aspect in countries like Germany where collective bargaining agreements play a large role that should not be underestimated: the increased importance of employer owned classification systems (i.e., job architectures) might enter in conflict with union levels and pay scales. The pay scales negotiated between unions and employers have their own logic, their own levels and their criteria often relate more to formal qualification and seniority. Part of the reason corporations refrain from applying their global job architecture in Germany is not to risk conflicts with trade unions and works councils. But what should then be the decisive categories for pay bands, information rights, analytics and reporting—the country- or industry-specific union pay scales or a globally integrated job architecture?
Not only will job codes, leveling systems, the classification of jobs according to content and tasks receive more attention, also the area of study how other corporations pay their employees—compensation surveys (to derive pay ranges) and in general reports on rewards market practices—will see more requests, simply because it is now not only about the competitiveness of pay compared to other companies, but also about the fairness of pay compared to market practice. This all means more internal rewards specialists, more resources dedicated to new service offerings by HR consultants or labour law firms, as well as to new software platforms or analytics. But: will all these activities caused by pay transparency legislation be more than “myth and ceremony” (Meyer and Rowan, 1977: 340), meaning formal processes and precautions, largely detached from actual decision-making?
Impact of pay disclosure: How realistic is it that the intended goals will be realized?
There are many possible and plausible ways of how employees at an individual level might react to pay transparency (Bamberger, 2023: 39ff.). Pay transparency might lead employees earning below communicated mean values or those generally concerned with fairness to ask for an increase, threaten to leave or decide to contribute less. But it might in the same way also lead employees with a more competitive mindset to ask for more, even when they are already above their peers. The effects on employees’ satisfaction, contribution and demands are not clear and will anyhow depend on the concrete implementation of different measures.
Regarding the concrete pay disclosure measures, pay ranges included in job ads (as long as the ranges are realistic) can in my opinion help to close unjustified gaps between applicants by providing to all more realistic information and by encouraging cautious or less demanding applicants to ask for more. And this probably would also help to close early career gender pay gaps. I suspect a similar effect through increased rights for information about their peers’ compensation on those who are already employees. For the latter, it is of course a question of what kind of information would be made available: the average target compensation of a group of comparable jobs? Or more characteristics of the pay distribution, like quartiles, minimum and maximum values, or even individual salaries? Apart from data privacy concerns, the concrete effects will depend on which aspects of compensation and in which detail will be made public information.
When it comes to reporting obligations, published figures on the gender pay gap or also the number of workers below adequate wages and the ratio of the highest paid individual to median employee’s earning (all three mentioned indicators are included in EU’s Corporate Sustainability Reporting Directive, (EU 2022/2464) will definitely create public attention for the reported numbers and to some extent also for the underlying topics. Companies do not want to look bad when it comes for example to the gender pay gap.
Pay disclosure measures like pay ranges in job ads, rights to obtain pay information for current employees or external reporting obligations actually do have the potential to counteract some aspects of pay discrimination. But pay disclosure measures will address more the gender pay gap between similar jobs, adjusted for factors like level, type of job, education and so on. The adjusted gender pay gap is typically relatively small compared to the overall gap—the much bigger part of the gender pay gap usually comes from the fact that women and men work in different jobs, in different industries and are unevenly distributed across levels. And this hardly will be addressed by pay transparency. Also, the spread between women’s and men’s earnings is smaller at an early career stage, to only become strikingly large at the age when women start having children. It is questionable if pay transparency can have an effect here. So, while pay transparency can indeed help to achieve greater fairness and equity in remuneration, there are simply many aspects of earnings inequality that will not be addressed by this kind of measures.
There is also a certain danger that pay disclosure measures might lead to unintended consequences, especially when rights to information of existing employees or variable compensation is concerned. The more information on pay is available, the more complaints, demands and discussions will be based on this information. To avoid discussions, part of the managers might prefer to differentiate less, for example in merit cycles, which would lead to some form of wage compression.
Individual variable compensation—annual bonus, long-term incentives or special awards—is often, at least to some extent, based on a manager’s discretionary decision. These decisions are not objective and sometimes hard to justify. With more transparency, variable compensation would come under increased pressure to be justified. In the end, more transparent pay could create an environment where it is harder to encourage and reward individual performance. And pay transparency could also make employers reluctant to give individuals higher salary increases, because everyone else would demand the same - with the corresponding cost effects (Cullen, 2004: 154).
Leaving aside possible unintended consequences and limitations of pay transparency, I still think that measures like pay ranges, information rights for employees to learn about the compensation of similar jobs or disclosure requirements on gender pay gap, living wages or vertical inequality have the potential to increase employee satisfaction and motivation, and to contribute to more pay equity. But if these positive effects in the end materialize will depend on the design of the concrete measures, how they are implemented and the extent to which pay transparency measures and pay disclosure obligations can be circumvented or neutralized.
Conclusion
As a compensation practitioner, I expect that pay transparency will help to close the gender pay gap between similar jobs, and in general more attention will be paid to pay equity topics. But this might come with substantial downsides from the perspective of employers: cost increase (in terms of pay raises), more bureaucracy and cost for additional resources devoted to this topic (HR professionals, projects, compensation surveys, tools, consultants). I also consider that there is a certain risk for pay transparency to cause pay compression, making it harder to incentivize and reward individual performance and to cause further undesired effects.
The main challenge for lawmakers will be to design pay disclosure measures that achieve their goals, but avoid excessive bureaucracy and cause dysfunctional rigidities. For the corporations, the main challenge will be to not only react to ever more legal obligations and external pressures, but to develop a strategic approach to pay disclosure and pay transparency.
The Austrian Public Policy Perspective on Pay Disclosure (Ingrid Moritz, until July 2023 head of the women and family department in the Chamber of Labour of Vienna)
Austria has one of the highest gender pay gaps in the European Union with 18.4% (2022) and is well above the EU-27 average of 12.7% (Geisberger, 2024). As part of the National Action Plan for Gender Equality, the social partners were already concerned with the question of reducing the gender pay gap and of comprehensible pay determination a decade ago (Sozialpartnereinigung zum NAP Gleichstellung, 2010). On the initiative of the Ministry of Women’s Affairs and the Ministry of Social Affairs, the social partners have started negotiations to develop a legal directive on pay transparency to address this gap. In 2011, pay transparency has been voted as part of an amendment to the Equal Treatment Act (Gleichbehandlungsgesetz, 2024). In the foreword to an evaluation of the Pay Transparency in the Equal Treatment Act, Gabriele Heinisch-Hosek, Minister for Women’s Issues, who was the driving force behind the legal initiative, stated: “I want people in this country to talk about money. Because transparency is the most effective means to combat pay discrimination.” (Deloitte, 2015: 4) As head of the women’s department at the Vienna Chamber of Labour at the time, I was involved in social partner negotiations. The Chamber of Labour also supported the implementation of the law through public relations work, workshops with companies and for works councils and employees.
I will share my experiences of the development of pay disclosure legislation in Austria and its impact. And I will look at what lessons can be learned from Austria when it comes to implementing the European Union’s Pay Transparency Directive that was passed in 2023. I begin with a brief insight into the legal provisions on pay disclosure in Austria and highlight the points of contention between employer and employee representatives. I then provide an overview of the more far-reaching rules of the EU Directive and highlight what lessons might be learned from the Austrian experience in transposing the Directive into national law.
What are the legal regulations for pay disclosure in Austria?
In 2011, the Equal Treatment Act passed two measures to promote pay transparency: gender-specific pay reports and pay information in job ads:
The first measure concerns gender pay reports: Employers with more than 150 employees are obliged under paragraph 11a of the Equal Treatment Act to prepare a gender-specific pay report every two years. The report must include the number of women and men employed, their distribution according to collective agreement job groups and the average or median pay without breakdown of the salary components. In order to be able to compare pay, the pay of part-time employees must be converted to full-time. Employees who are not employed all year round have to be extrapolated to full-year employment. The purpose of the pay report is to identify and dispose gender-specific differences between men and women.
The report must be prepared anonymously without conclusions to be drawn about individuals. The report is for internal use only and is not for public disclosure. The law sets out a hierarchy of who may receive the report: the report is to be sent to the central works council (Zentralbetriebsrat) first. If there is no central works council, the report has to be sent to the works committee (Betriebsausschuss). Only if there is no such committee will the works council receive the report. (Felten, 2017: 12). If there is no works council in the company, the employer must make the gender pay report available in a room that is accessible to all employees. Importantly, employees are obliged to keep the contents of the pay report confidential. A fine of up to 360 Euros is provided in the event of an offense, unless other more severe sanctions apply. However, it is permitted to obtain legal information or advice from interest groups such as trade unions or the Chamber of Labour. If no report is made, the works council can take legal action.
The second measure is information on pay in job ads: According to paragraph 9 of the Equal Treatment Act, employers and employment agencies must state the minimum pay for the job that applies according to collective agreement when advertising vacancies and must indicate the willingness to overpay.
If the employer does not comply with this provision, the persons applying for the advertised position may request that an administrative fine will be imposed on the employer. For the first offense, the employer will receive a warning. Subsequent offenses are punishable by a fine of up to 360 Euros. The Ombud for Equal Treatment (Gleichbehandlungsanwaltschaft) can also request an administrative fine. However, administrative authorities cannot take action on their own initiative. The law also does not provide for the right of employee interest groups such as trade unions or Chambers of Labour to report to the administration.
What were the controversial points within the social partners during the negotiations of the law?
The negotiations between the social partners, consisting of the four organisations the Austrian Trade Union Confederation (ÖGB), the Austrian Federal Chamber of Labour (BAK), the Austrian Federal Economic Chamber (WKÖ) and the Austria Chamber of Agriculture (LKÖ) and with the participation of the Federation of Austrian Industries (IV), were essentially characterized by two controversial issues, which concerned both the pay reports and information on pay in job ads. The different positions were very fundamental. On the one hand, there were different ideas about the objectives of the two measures, and on the other hand, the dispute revolved around the legal consequences that should be attached to violations of the legal provisions of pay reports and salary information.
Conflicts about the objectives of pay reports
Much attention has been paid to issues such as what the report can be used for, whether the works council can give the full pay report to employees and whether employees can discuss their salaries with each other. The Austrian Trade Union Federation and the Chamber of Labour argued that staff councils and employees should be given access to the full pay report within the company and that it should be allowed for employees to discuss their salaries with each other. In addition, the works council should be allowed to provide information on the pay report at works meetings with the employees. If the pay report revealed factually inexplicable differences in pay, these should be eliminated as part of a women’s promotion plan. The workers’ representatives also demanded that the presentation of pay in the report should be highly differentiated according to remuneration components in order to make it easier to detect unequal pay. To this end, allowances, bonuses and benefits in kind should also be reported separately.
The aim of the employee organizations was also to use the gender pay reports to bring about a cultural change so that the gender pay gap and its causes are discussed within the company. This should lead to less discrimination and fair pay policies.
Employer representatives feared that disclosure of pay could lead to unrest and demotivation within the company if employees were to compare themselves with others. In their view, employees should only be able to see the parts of the pay report that are relevant to them, and the report should be kept confidential. Companies should also not be burdened with bureaucratic tasks, such as having to itemize pay components.
Employers’ representatives also argued that they should not be held responsible for pay differences that are caused by societal factors, such as the unequal distribution of caring responsibilities and the increased use of parental leave by mothers, career disadvantages due to increased part-time work by women, or lower pay due to different career choices by women and men. Mandatory implementation of affirmative action plans in the event of an objectively unjustified gender pay gap was strongly rejected by the employers’ representatives in the report.
Disagreement about the legal consequences of pay reports
The different views on the use of pay reports were also reflected in the attitudes toward sanctions, which mainly revolved around the issue of the confidentiality of the pay reports. The employers’ representative asked for legal sanctions, if the intended use of the report was violated. The employers’ organizations were also concerned that the information could be leaked and that insight into internal company information could put them at a competitive disadvantage. There was a fear that disclosure of the pay structure could lead to an upward spiral in pay if employees could compare it between companies.
In the opinion of the employee’s representative strict confidentiality regulations would significantly reduce the scope for using pay reports as a tool to bring about a cultural change and break down the taboo on talking about pay. There would be uncertainty and fear of negative consequences among the workforce and the works council to discuss pay openly in the company.
There was also an unspoken fear that the visibility of large pay differentials, from senior executives to low paid workers, could have a negative impact on the motivation of lower paid workers. So, there was also a fear that the value of work as a whole would be called into question. There is no doubt that the valuation of work is an issue with a high potential for conflict, especially as there are large differences in pay. For example, stressful working conditions, responsibility, organizational tasks or work requirements such as friendliness in contact with customers are often not sufficiently rewarded. These are certainly questions about the value of work for society as a whole. However, the possibility of comparing jobs and pay within the company could make this an issue within the company.
Uncertainty about what the pay reports could be used for remained even after the law was passed. In order to gain more certainty and clarity about what the gender pay reports could and could not be used for, the Chamber of Labour requested legal advice (Felten, 2017). Felten argued that the contents of the pay report did not constitute a trade secret within the company, and therefore its internal disclosure did not constitute an unlawful betrayal of secrets (p. 23). However, the situation is different in relation to the outside of the company. In this case, the employer has a legitimate interest in keeping the internal pay policy secret, as the information could have an influence on economic competition (Felten, 2017: 24). It would be inadmissible to publish the pay report on social media sites or to pass it on to journalists or politicians in order to generate public pressure on the employer (Felten, 2017: 58). This must be distinguished from the right of the works council and employees to seek advice from trade unions, Chambers of Labor or equal treatment lawyers. Ultimately, the pay reports were designed for internal purposes only and are subject to confidentiality.
Another area of the social partnership dispute concerned the question of the legal consequences in case that the pay report will show unjustified differences in pay. Workers’ representatives argued for mandatory women’s promotion plans to give works councils a tool to negotiate a plan to reduce the pay gap in the company. But the employers’ associations only agreed to the introduction of pay reports if there were no enforceable company agreements in return. As a result, there aren’t any effective measures to reduce the pay gap. Only if no pay report is drawn up can this be enforced, but the law does not provide for any sanctions.
Disagreement concerning the content of salary information
With regard to pay levels, the Chamber of Labour and the trade union argued that jobseekers should be able to get a realistic idea of the expected pay for the advertised job. This could be achieved by indicating a pay range according to professional experience and training. Employee representatives considered the public sector pay system as a model. There is little scope for salary negotiation, which is seen as an important reason for the smaller gender pay gap in the public sector.
Employers’ representatives argued in favor of as much freedom as possible to advertise the pay for a job. They argued that companies need room to negotiate in order to be able to respond to labor supply, level of education and previous experience, and not to be hindered in their search for skilled workers. Women’s earnings disadvantage should be reinforced by other measures, such as to provide training for women in salary negotiation.
As the law does not provide for an obligation to indicate the expected salary, the negotiation of pay has remained highly relevant. However, this does not exempt the employer from ensuring equal treatment in terms of pay. As early as 1998, the Supreme Court (9ObA350/97d) stated that salary negotiations are not an objectively justified reason for paying women and men differently for the same or equivalent work.
Dispute over penalties for breaching job advertising rules
Employers’ representatives initially took the view that there should be no sanctions if employers did not advertise in accordance with the law. In fact, in the first year of implementation, there were no sanctions. As a result, only 48% of job advertisements contained salary information in 2011 (Deloitte, 2015: 49). It was not until the following year that an administrative penalty was introduced for repeat offenders after an initial warning.
Another point of contention was who should be allowed to report violations of the regulations on salary information to the administration. Chambers of Labour and Trade Unions were interested in such a right to advertise and, as powerful organizations, would have been in a position to check that advertisements complied with the law and to report violations. However, they did not succeed in obtaining the consent of the employer representatives. Finaly the possibility of reporting was transferred to the Ombud for Equal Treatment, which had little interest in being entrusted with this task as it didn’t want to come into conflict with companies.
The negotiations between the social partners on the two measures focused on the implementation of pay reports. Pay information in advertisements was comparatively less contentious. After the legal implementation, however, it became clear that pay information in job advertisements is definitely an important tool for pay transparency, which not only can benefit women, but can be helpful for all job seekers. For companies, advertisements with salary information were quite challenging, as they did not want to scare off potential applicants by paying a minimum wage, but they also did not want to enter in payment competition with other companies for the best workers.
What impact has the Equal Treatment Act had?
In 2015, Deloitte evaluated the impact of pay information in job ads and gender pay reports on behalf of the Ministry for Women’s Affairs (Deloitte, 2015). It was found out that 90% of the companies fulfill the formal requirements for stating the pay information in job ads. In 2014, 85% of the salary information was supplemented by the indication that there was a willingness to overpay. However, the pay range is not a common practice of salary information in job advertisements (Deloitte, 2015: 22). Women take the pay information in job ads more seriously than men and are more orientated toward it (Deloitte, 2015: 7 and 35). The current study by Yilmaz and Brandl (2025) shows that the gender gap in pay expectations only disappears when the pay range in job ads is specified, but it remains in case of minimum pay and overpay—both of which are the most common.
The Deloitte evaluation found that although the pay reports were produced by the companies and sent to the works councils, there was little further discussion on them. It is also noted that the pay report has made it clear that there were gender pay differences and that the reasons for this raised questions within the companies. However, the pay reports rarely reached the workforce. The information was seen more as an obligation of the employees to collect than as an obligation of the company to provide. Employees had little knowledge of pay reports (Deloitte, 2015: 7 and 38).
In Austria, the implementation of pay reports was insufficient. Companies were only obliged to provide documentation, but no further steps were taken to reduce the gender pay gap.
EU initiative to close the gender pay gap
The EU Directive on Pay Transparency was adopted in 2007 and is far more ambitious than the Austrian Equal Treatment Act of 2011 in terms of reducing the gender pay gap. In addition to the right to information, it also provides for the enforcement of equal pay for individuals and structural measures to combat unequal pay. As the Directive must be implemented by Member States within the next 3 years, I will highlight the most important measures and then reflect on what lessons can be learned from the Austrian experience for effective implementation.
Brief overview of the measures in the EU-Directive
Information Rights: Jobseekers must be informed about initial pay or its range, and employers cannot ask about prior pay history. Employees have the right to know their pay level and the average pay for similar roles differentiated by gender as well as the criteria that are used to determine pay levels and pay progression.
Reporting Obligations: Companies with more than 250 employees must report annually on the gender pay gap, including bonuses and non-cash benefits. Smaller companies have less frequent reporting requirements. Companies with fewer than 100 employees are exempt from the reporting obligations.
Support Structures and Monitoring: Member States must set up a monitoring body responsible for analyzing the employers’ report and raising awareness. They must implement gender-neutral job evaluation methods that assess pay on the basis of at least four factors (skills, effort, responsibility and working conditions).
Enforcement and Sanctions: The directive mandates effective, proportionate, and dissuasive sanctions for non-compliance, including fines and potential impacts on public contracts.
What lessons can be learned from the Austrian experience when implementing the EU Directive?
An early start to implementation is necessary: The directive contains numerous measures that require good preparation. These include job evaluation instruments and the establishment of a monitoring body. The directive must be implemented in accordance with the Equal Treatment Act and it is assumed that it will require a lot of time for negotiations between the social partners. The monitoring body required by the EU is probably the key issue. Its independence and adequate resources are of key importance. However, it can be assumed that social partners want to have a say in the monitoring body. On the one hand, this might be an advantage that these powerful institutions have to deal more with equal pay and that they have insight in the company’s activity. On the other hand, the male-dominated culture of the social partners is also an obstacle to promoting equal pay. For implementation to get off to a good start, companies need clear guidance, support and sufficient time to implement the Pay Transparency Directive.
The directive needs to be implemented clearly and unambiguously. It must be made clear that internal communication about pay is allowed and not punished. According to the directive, workers, the workers representatives, labor inspectorates and equality bodies will have access to the pay report and the right to ask employers for additional clarifications regarding of the data provided. This removes the uncertainty as to whether the full report is internally accessible. In contrast to Austria, bonus payments, premiums or non-cash benefits must be reported separately, which will improve the information content. Another important clarification for Austria is that, under EU law, employees may not be prevented from voluntarily disclosing their remuneration. In Austria, there have been employment contracts with confidentiality clauses that prevented employees from discussing their own salaries. The removal of confidentiality clauses could make it easier to talk about pay without fear.
The social partners can play an important role in keeping the discontent of companies to a minimum by helping to implement the directive in practice, but also by constantly reminding them of the purpose of the legislation and supporting the objective of reducing the gender pay gap. According to the EU Directive, action must be taken to close the gender pay gap within 6 months if the gap is more than 5%. Otherwise, action must be taken with employee representatives to evaluate pay. The social partners could play an important advisory role in helping companies to close the pay gap. In Austria, a lot of energy has been expended in the past to minimize the burden on companies. It is important not to lose sight of the purpose of the Directive, which is to achieve equal pay for women and men. The objective of equal pay should be supported constructively. However, it would be counterproductive if the responsible actors (government and social partners) distanced themselves from the directive and shifted responsibility for it to the EU. If companies succeed in implementing fair pay, they will also benefit from transparent pay structures and will not have to worry about internal discussions on pay.
Employees should be encouraged to make use of the new legal options. They want fair pay, but are often afraid to actively demand it. The new legal possibilities will only come to life if they are also applied in practice. The directive provides employees with good conditions to enforce fair pay in the companies. The cultural change can only succeed if it becomes a matter of course for works councils and employees to demand pay transparency and fair pay in their workplaces.
Smaller companies must also be prepared for equal pay. Austria’s corporate structure is characterized by small businesses. They do not have to submit income reports. The EU Directive also provides for exceptions here. Burger and Koscan-Göschl (2023) point out that the limitation of the reporting obligation to employers with 100 or more employees would mean for Austria that only 0,6% of companies and 53% of employees would be covered. In order not to exclude half of the employees from the improvements, further steps are needed in the future to prepare small businesses for transparent wage structures.
