The EU Pay Transparency Directive, which entered into force on 7 June 2026, introduces new obligations for companies, but also creates an opportunity to make compensation more strategic. Although the directive’s primary objective is to narrow the gender pay gap, its impact extends much further—to recruitment, employee experience, employer brand, and the overall structure of compensation.
In our view, for many companies this is not merely a legal change, but a cultural shift.
The Directive Also Applies to International Groups Operating in Finland
The Pay Transparency Directive does not apply only to European-owned companies. If your company is, for example, a Finnish subsidiary or branch of a US, UK, or Asian corporate group, the implications of the directive cannot be ignored. When an employer has employees in Finland, its operations are governed by Finnish employment regulations, increasingly shaped by EU legislation as well.
This can create new challenges, particularly for international organisations where salary models, bonus structures, and employee benefits have been designed globally.
Key questions include, for example:
- How can global compensation models be adapted to Finnish requirements?
- Are employee benefits offered in different countries comparable?
- Is total compensation documented in a way that meets transparency requirements?
In multinational organisations, the challenge is often not simply compliance, but also fragmented data: salary information, bonus models, insurance arrangements, and employee benefits may be spread across several different systems or country organisations.
What Does the Pay Transparency Directive Mean in Practice?
Under the directive, employers are required to provide greater transparency regarding the criteria used to determine pay. In practice, this includes, among other things:
- Job applicants must be informed of the salary or salary range for a position before employment begins.
- Employers may not ask applicants about their previous salary history.
- Employees have the right to request information about their own pay level as well as the average pay levels of employees performing work of equal value, broken down by gender.
- Organisations with at least 100 employees will have reporting obligations regarding gender pay gaps.
If a pay gap exceeds 5% without an objective justification, the company must assess the situation and take corrective action.
Why Does This Also Apply to Employee Benefits?
When discussing compensation, it is easy to focus solely on monthly salary. In reality, an employee’s total compensation consists of a much broader package.
This may include occupational healthcare arrangements, voluntary employee insurance, pension and savings solutions, sports, wellbeing and meal benefits, as well as bonus and incentive schemes.
When a company assesses the fairness of its compensation practices, base salary alone does not tell the whole story. The structure of employee benefits also affects how employees perceive their overall compensation.
This is even more pronounced in international corporate groups. In Finland, a competitive employee benefits package may look very different from the package offered in the parent company’s home market. This makes local market expertise increasingly important.
Pay Transparency Can Also Be a Competitive Advantage
The directive is often viewed primarily as a compliance initiative, but at its best, it also represents a significant opportunity.
Companies that are able to articulate their compensation practices clearly can benefit from, for example, a stronger employer brand, greater employee engagement, smoother recruitment, and lower employee turnover.
Transparency builds trust, and trust is one of the most valuable forms of human capital.
What Does a Company Need to Do?
A good starting point is to review the entire compensation package—not just the payroll.
Companies should ask themselves:
- Are the principles and criteria for determining pay properly documented?
- Is work of equal value defined consistently?
- Are global compensation models aligned with local regulations?
- Do employees understand what benefits are available to them and why?
In many cases, reviewing employee benefits, insurance arrangements, and compensation structures reveals opportunities to improve both cost efficiency and the employee experience.
In the era of pay transparency, the companies that succeed will not be those that ask only, “What do we pay?”, but also, “How do we build a competitive, fair, and transparent total compensation package?”
In that work, having the right partner can make a significant difference.
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Firstbrokers Oy was founded in 1989 and is thus the first insurance brokerage company in Finland. Customers are Finnish SMEs and subsidiaries of international companies. Firstbrokers Oy is also the most international insurance broker in Finland, as it is a member of several global insurance broker networks. This enables business customers to provide risk management, insurance and employee benefits services easily, cost-effectively and reliably in more than 110 countries. Firstbrokers Oy covers its customers’ business and employees in all industries. Firstbrokers Oy continuously manages the risk management, insurance and employee benefits of more than 200 companies, and has already served more than a thousand companies during its 35 years of operation. We’ve got you covered!