European pay transparency legislation has a common objective, but individual countries have implemented different operating models based on their own labour market conditions and previous experience. Understanding these models can be particularly useful for Hungarian companies, as instead of a single model to follow, we can see several different approaches and have the opportunity to incorporate the best examples into our own practices.

In Sweden, they first look at what is already working

In the Swedish system, pay reviews have long been integrated into corporate operations. Employers are required to map and analyse the pay of women and men annually, any differences between employees performing equal work or work of equal value, as well as practices relating to pay and other terms of employment.

For Hungarian companies, the main conclusion is that they do not necessarily need to build everything from the ground up. It is worth first assessing which HR elements are already in place within the organisation, such as annual pay reviews, consistent job classification, pay benchmarking, performance appraisal or even some form of pay gap analysis.

Many companies already have several of these elements, but they form part of different processes. In such cases, the first task is not necessarily to introduce additional HR tools, but to connect the existing ones. In this way, pay transparency may be less about building a new system and more about making the existing system more consistent.

In Germany, they do not try to solve everything at once

Germany has had pay transparency legislation since 2017. Under certain conditions, it provides employees with an individual right to request information: among other things, they may request information about the criteria and procedures used to determine their own pay and the pay of employees performing the same work or work of equal value, as well as information about comparative pay. Under the current legislation, this individual right to information generally applies in establishments with more than 200 employees.

One of the most important lessons from the German example is gradual implementation. It shows that pay transparency does not necessarily need to be treated as a single large-scale project, but rather as a series of consecutive steps. Reliable data are required first, followed by the consistent classification of jobs and then the development or review of the pay structure and pay bands. This can be followed by managing information rights and reporting, and finally by correcting unjustified differences.

Hungarian companies therefore do not need to resolve everything immediately, but they should have a clear understanding from the outset of the system they ultimately want to implement.

In France, they understand that there are people behind the figures

The French model offers an important lesson from a different perspective, as equal pay and the management of pay differences are more closely linked to employee dialogue and organisational consultation. Companies with 50 or more employees are required to calculate and publish their index measuring professional equality between women and men each year. The results must also be submitted to the employee representative body, the Comité social et économique. If the index score is low, the state seeks to intervene through corrective measures.

This model demonstrates that beyond a certain point, pay transparency is no longer simply a matter of data analysis. Once pay bands have been established, jobs have been evaluated and differences have become visible, the resulting questions must be addressed, and they can no longer be answered with an Excel spreadsheet. Clear rules, well-prepared managers and understandable communication are required, because employees need to understand the principles on which pay decisions are based.

What lessons can Hungarian companies draw from these international examples?

In my view, the different systems of these three countries lead to three practical conclusions that are worth considering even before the details of the Hungarian legislation are known.

• 1. Build on what is already working. The first step in preparing for pay transparency may be to review existing HR processes, because in many cases the foundations are already in place and only need to be connected.
• 2. Proceed in the right order. Without reliable data and a consistent job structure, it is difficult to establish properly functioning pay bands. Without pay bands, transparency may create more problems than it solves.
• 3. Involve the organisation as well. Pay transparency becomes workable when, in addition to HR, managers also understand the logic of the system and can explain it credibly to employees.

Sweden, Germany and France demonstrate three different ways of applying the same principle, but their common feature is clear: in the long term, pay transparency is not simply another HR task or annual report, but one of the most important principles underlying the operation of the pay system. Based on international models, we can incorporate the best practices into day-to-day operations.

If you require further information or assistance in relation to pay transparency, please contact our experts.