How can HR balance pay transparency with employee privacy?

The EU Pay Transparency Directive is designed to make pay systems fairer and clearer, but it doesn’t mean revealing everything. It’s not about exposing individual salaries.

HR teams must balance openness with protection, using aggregated and anonymised data to ensure fairness without compromising personal privacy.

What must be shared under the Directive:

• Salary ranges for open roles
• Objective, gender-neutral criteria for pay and progression
• Average pay levels (by gender) for employees in the same or equivalent roles

What isn't required:

• Disclosure of individual salaries
• Information that could identify specific employees in small groups

How to protect privacy while being transparent:

1. Aggregate data
   1. Share averages, not individual salaries
   2. Use minimum group sizes (e.g. 3-5 people) before disclosing data
   3. Suppress or mask figures if necessary
2. Use smart reporting techniques
   1. Report by quartiles instead of naming salaries
   2. Apply rolling averages for small groups to reduce volatility
   3. Avoid data that could be reverse-engineered
3. Stay GDPR-compliant
   1. Apply principles like data minimisation and purpose limitation
   2. Limit access to sensitive data to authorised staff
   3. Don't rely on employee "consent" to share pay data. Legally, it's rarely valid in a workplace context, as consent isn’t seen as freely given due to the power imbalance in employer–employee relationships. Relying on it risks inconsistency and legal challenges.
4. Build understanding internally
   1. Explain why some data is withheld
   2. Work with employee reps or works councils to set guardrails
   3. Reassure staff that transparency is about fairness, not exposure

See also: What’s the minimum sample size for pay gap reporting? 

Transparency and privacy aren't opposites - they need to work hand in hand. With careful reporting, you can share meaningful insights, protect personal data and maintain trust across your workforce.

Done well, pay transparency strengthens trust. Employees can see that fairness is being measured and acted on - without fearing their personal information will be exposed.

That's how HR leaders turn transparency from a compliance burden into a credibility boost.