John Mercer
CEO of Marsh Ireland and CEO of Mercer Ireland
Navigating the EU Pay Transparency Directive: Key Challenges and Strategic Insights for Businesses in Ireland
After a period of limited updates, momentum appears to be building around transposing European pay transparency legislation in Ireland. With this comes both pressure and opportunity. On the one hand, organisations must comply with the new rules. On the other hand, they can now put reward on a more structured, logical and transparent footing.
However, Mercer’s Global Pay Transparency 2025 Survey reveals a significant readiness gap: only half of organisations feel equipped to navigate the complexities of these mandates.
What the EU Pay Transparency Directive Means for Employers
The directive introduces important new obligations on employers in Ireland.
Employees will have new rights to access clear, individualised breakdowns about how they are paid, how their pay is determined and how their pay position can be improved.
Employers must communicate salary information as part of the hiring process.
The burden of proof in a pay equality claim shifts to employers, increasing risk.
Employers must define the categories of worker within their organisations.
Addressing the Challenges of Transparency Compliance with Confidence
More than half of companies (53%) report difficulties in securing leadership alignment and educating key stakeholders on pay transparency requirements. What’s more, 45% of organisations struggle to keep pace with changes to European and global regulations, leading to risk of inconsistent implementation and missed compliance deadlines.
Another major hurdle is employee comprehension. Nearly 40% of organisations find that employees do not fully understand their compensation frameworks, which can undermine transparency efforts and employee trust.
Additionally, one in three companies lacks a robust compensation infrastructure – such as well-defined job architectures and policy frameworks – to support transparent pay practices.
While nearly half of survey participants have maintained their remediation and compliance budgets amid shifting regulations, only 17% have increased funding – with mainly modest rises. Mercer’s data shows that closing pay gaps can cost between 0.5% and 3% of total payroll. Cost drivers include adjusting wages, acquiring expertise, implementing right-to-information processes and fulfilling reporting obligations.
Many businesses are concerned that openness around pay may impact competitive advantage. It will be critically important to use market-based salary data and to focus on the wider employee value proposition to strengthen employer branding and attract talent.
On the positive side, pay transparency also presents significant opportunities. Compliance should result in a more structured approach to rewards, which may reduce costs. More obvious fairness and accountability may also strengthen employee engagement and retention.
Organisations that embrace transparency can better align leadership and stakeholders, improve employee understanding of compensation, build trust and strengthen their employer brand. Taking early, informed action – such as conducting pay equity analyses and updating job architectures – will help them manage risk and harness the benefits of transparent pay.
Taking your first steps to compliance
Assess your organisation’s readiness for compliance.
Conduct a thorough pay equity analysis.
Review and update your job architecture where applicable.
Implement necessary adjustments to mitigate risks.
Prepare to communicate clearly to all stakeholders how you ensure equal pay for work of equal value.
These processes require time and expertise. The time to act is now and Mercer is here to help.
