An earthquake is coming to global pay structures, and its epicentre lies in Europe’s new transparency laws. The EU’s Pay Transparency Directive, which will become law in less than 200 days, will require companies to reveal salary ranges, publish job comparisons, justify gaps and show the criteria behind pay decisions.
In much the same way as Europe’s General Data Protection Rules (GDPR) apply privacy laws to South African companies targeting citizens of Europe, the new Directive will reach further than the EU borders.
Any South African organisation with employees in Europe – from a full subsidiary to a remote sales team – now stands in the path of a regulatory shift that redefines how remuneration is designed and recorded.
“Even though it applies to all EU companies, it doesn’t mean they have to be headquartered in the EU,” said Neil Fromow, senior principal solution consultant at human resources software company Workday, during the company’s Rising 2025 conference in Barcelona this week. “It applies to all global companies that have EU operations.”
The extraterritorial reach is written into the structure of the Directive. A company with offices in Frankfurt and Johannesburg cannot separate the two systems. The moment an employee sits in Europe, their employer falls within the reporting scope.
Workday used Rising 2025 to demonstrate a tool built specifically for this environment: the Pay Transparency Analyzer. It supports the Directive’s requirements by providing a dashboard of structured role definitions, consistent pay frameworks, documented progression logic, analytics that expose disparities, and reports that can be examined line by line. I
A demo by Fromow on the event’s expo floor showed how easily gaps surface once data from different markets is placed under a single lens. And companies are not ready for it. Many organisations discover the scale of the challenge only once they start collecting their data.
“I was speaking to a customer yesterday,” said Fromow. “He has 64 payroll systems that he needs to bring together. Imagine 64 payroll systems together and make them work in 199 days. They’ve not even started projects. It’s unbelievable.”
Many multinationals operate with a mosaic of payroll providers, formats and practices accumulated over years of growth, acquisition and localisation.
The Directive does not grant exemptions for organisational complexity. Companies with tangled payroll landscapes must untangle them at speed.
The Directive also reframes the relationship between current staff and the organisation. Fromow said that employees were approaching the new law with specific expectations.
“Employees are worried about two things: the right to information and the legal challenges. That could be enormous.”
Once salary ranges, pay gaps and comparative groupings are published, staff gain immediate visibility into how their roles align with colleagues across regions – and could mount legal challenges.
Recruitment is affected as well. Fromow drew attention to one of the Directive’s most practical requirements. “If you’re applying for a new job, people have the right to see a transparent pay range before you go. It has to include incentives, and it has to be region-specific as well.”
That means employers must disclose ranges, criteria and geographic adjustments upfront.
Fromow saw the enormous benefits of this requirement: “It’s a real instrument of social change.”
He tied the Directive directly to his own experience of working life across decades.
“I’ve got six children, four girls, two boys. It winds me up that the four girls are going have to work harder for the same money. I did a law degree back in 1997 and I remember doing employment law at the time, and reading about the Equal Pay Act in the UK. At the time I thought, surely there can’t be a pay gap in 1997. Yet, in 2022 we still had a 12%-13% pay gap across the EU.”
The Directive forces companies to present their structures in ways that expose patterns they may not have studied before.
Workday’s tool provides the scaffolding for this shift. It merges payroll, incentives and pension data, including information from external systems, so that comparisons can be made correctly.
“We’ve allowed our customer to add all of that external data so that we can join it up with the Workday data, and then let Pay Transparency Analyzer do its magic to calculate all the pay gaps.
“It’s way more than just about transparency. It’s a fundamental rethink of how we pay people.”
* Arthur Goldstuck is founder of World Wide Worx, editor-in-chief of Gadget.co.za and author of “The Hitchhiker’s Guide to AI: The African Edge”.