The role of HR in promoting equal pay

The role of HR in promoting equal pay

The discussion about equal pay is not new, but the urgency has increased. With the EU Pay Transparency Directive coming into effect in 2026 and a strengthened role for the works council, equal pay is firmly back on the HR agenda. For many organizations, this is not just a legal obligation, but also a fundamental part of good employment practices. Yet research shows that pay differences between employees performing equivalent work still occur. The question is no longer whether HR plays a role in this, but how you as an HR professional proactively address and prevent these differences. Because let’s be honest: a fair compensation structure is not a nice-to-have, but a crucial factor in engagement, retention, and organizational culture.

What does equal pay actually mean? equal pay for equal or equivalent work sounds simple, but in practice it’s more complex than it seems. it means that employees who perform work of equal value must also be paid equally, regardless of gender, age, origin, or other grounds for discrimination. this is not just about the same job level. jobs that are different but have comparable weight in terms of responsibilities, competencies, and impact also fall under this principle. A technical specialist and a senior project manager can, for example, perform equivalent work, even though their tasks are completely different. the core lies in objective valuation. what is the work worth to the organization? what knowledge, skills, and responsibilities does it require? and how does that relate to other positions? these questions form the basis for a fair compensation system.

Why equal pay is crucial for your organization

The legal aspects are clear: discrimination based on gender or other grounds is prohibited according to Article 1 of the Constitution and various equal treatment laws. But the business case for equal pay extends far beyond compliance alone. Organizations that allow unequal pay run reputational risks. In a time when transparency is becoming increasingly important and employees easily share information via platforms like Glassdoor, a reputation for unfair compensation can seriously damage your position in the labor market. Top talent consciously chooses employers who hold fairness and equality in high regard. Additionally, unequal pay has a direct impact on engagement and productivity. Employees who discover that colleagues with comparable work earn more feel undervalued. This leads to reduced motivation, higher absenteeism rates, and ultimately to turnover. The costs of replacement and the loss of knowledge weigh heavily.

The proactive role of HR in pay equity

As an HR professional, you are the architect of a fair compensation system. That role begins with establishing a transparent pay structure. This means you set clear salary scales per position, based on objective criteria such as job weight, competencies, and market value. A solid job architecture forms the foundation for this. By systematically evaluating and classifying jobs, you create an objective framework on which you can base compensation decisions. This prevents arbitrariness and ensures that comparable positions are also compensated comparably. BAM demonstrated that a solid job architecture and clear policy are effective in ensuring equal pay, even in sectors where traditionally large pay differences exist. But setting up a system is not enough. HR must regularly conduct pay gap analyses to identify unintended differences. What patterns do you see? Are there systematic differences between groups of employees? And if so, what is the cause? Data-driven HR is essential here. Platforms like Deepler help organizations collect and analyze these insights, so you can act proactively before small differences become big problems.

Transparency as foundation

The Pay Transparency Act, which will be implemented soon, requires organizations to be more open about compensation structures. But don’t wait until the law forces you. Organizations that already embrace transparency now are building trust with their employees. Transparency doesn’t mean posting everyone’s salary on the intranet. It’s about employees understanding how compensation decisions are made. What are the criteria? What salary range belongs to their position? And what can they do to advance to a higher scale? This openness requires courage, because it makes you vulnerable to critical questions. But it also forces you to be consistent. If you can’t explain compensation decisions, that’s a signal that your system may not be objective enough. That confrontation is valuable, because it helps you improve your policy.

The strengthened role of the works council

The amendments to the Works Councils Act strengthen the role of the works council in equal pay. The term ‘pay structure’ is being replaced by ‘a system for job evaluation and classification’, which gives the works council more influence on the foundations of your compensation policy. This requires a different collaboration between HR and the works council. Don’t see the works council as a controller, but as a partner in creating a fair system. Involve employee representation early in designing or adjusting your compensation structure. Their input from an employee perspective can expose blind spots you might otherwise have overlooked. This collaboration does require good preparation. Ensure your data is in order and that you can substantiate your choices. The works council will rightfully ask critical questions about differences between job groups or departments. If you don’t have an answer to that, you lose credibility.

Practical steps toward equal pay

Start with a thorough analysis of your current situation. Conduct a pay gap analysis in which you systematically look at compensation differences between groups of employees. Focus not only on gender, but also on other dimensions such as age, origin, or contract type. What patterns do you see? And what are possible explanations? Then develop a clear system for job evaluation and classification. Define objective criteria that determine what a job is worth. Think about complexity of the work, required knowledge and experience, degree of autonomy, and impact on organizational goals. Ensure these criteria are applied consistently across all departments and teams. Communicate transparently about your compensation policy. Explain how salary scales are structured and what criteria you use. Give managers tools to conduct compensation conversations in which they can explain decisions. And create space for employees to ask questions if they feel they’re being treated unequally. Monitor structurally whether your system works as intended. Schedule an annual pay gap analysis and discuss the results with management and the works council. Have new differences emerged? Are your correction mechanisms working? And do employees feel fairly treated? Feedback from employees, for example through short questionnaires like Deepler offers, provides valuable insights into how your policy is experienced in practice.

From compliance to culture

Equal pay is more than a legal obligation. It’s an expression of your organizational culture and values. Organizations that take equal pay seriously show that they value employees based on their contribution, not based on irrelevant characteristics. You don’t build this culture with a nice policy document. It requires consistent action, from recruitment to promotion. It requires managers who can explain compensation decisions and dare to correct when it turns out they weren’t objective. And it requires an HR function that uses data to recognize patterns and proactively adjust. The challenge is great, but so is the impact. Organizations with fair compensation structures score higher on employee engagement, have less turnover, and attract better talent. They build a reputation as an employer who does what they say. And in a tight labor market, that’s a competitive advantage not to be underestimated.

Your next step

Don’t start with the perfect system. Start with insight into where you stand now. Conduct a thorough analysis of your current compensation structure and identify where the biggest risks and opportunities lie. Involve your works council and management in this analysis, so you create support for the steps that follow. Then build step by step toward an objective system for job evaluation and transparent communication about compensation. And measure continuously whether your system works. Because equal pay is not a project with an end date, but a continuous process of monitoring, adjusting, and improving. That is the role of HR: not just making policy, but ensuring that fairness is put into practice.