Pay transparency is becoming one of the most important employment law and human resources management issues in the European Union. The Pay Transparency Directive aims to ensure equal pay for equal work or work of equal value and to reduce unjustified pay differences, particularly between women and men. Although the national legislation implementing the Directive in Latvia is still being developed, organisations should not wait until the final regulatory framework is adopted. Preparing for the new requirements takes time, and organisations can start now.
The new regulatory framework will significantly increase employers’ obligations regarding the transparency of pay structures, data collection, pay analysis and reporting. At the same time, employees will have greater rights to access pay information and request explanations for potentially unjustified pay differences. This means that organisations will need to review their existing job structures, pay policies, HR data quality, internal processes and HR documentation.
Preparing early can help organisations not only mitigate legal and reputational risks, but also use the new transparency requirements as an opportunity to improve reward management. Organisations that start preparing early will be better positioned to meet regulatory requirements while also strengthening employee trust, improving talent attraction and retention, developing more consistent HR policies and enhancing their competitiveness in the labour market.
The Directive introduces several obligations for employers:
In addition to the requirements of the Directive, organisations often encounter circumstances that indicate a need to review their existing approach to pay:
A transparent pay structure is about more than compliance. It can help organisations:
KPMG’s approach brings together expertise in employment law, human resources, reward, data analytics, systems implementation and change management. This enables organisations to prepare for the Directive in a structured way, from building awareness and conducting an initial risk assessment to carrying out in-depth analysis, reviewing job and pay structures, preparing for reporting requirements and implementing the necessary changes in practice.
We help HR teams and management understand the Directive, the latest implementation developments and the practical steps needed to prepare. During the session, we discuss the key requirements, including developments in the Latvian regulatory framework, the data and documentation required, and the organisation’s level of readiness to help identify priorities and next steps.
We assess the legal and practical implications of the Directive for the organisation, its employment processes and pay practices, including employment contracts, internal policies, recruitment procedures, employee communications, pay-setting criteria and the rationale behind pay decisions.
At the same time, we analyse pay data to identify potential pay gaps, understand their underlying causes and assess whether they are objectively justified. The analysis may include job groups and levels, reward components, performance criteria and career development processes.
Based on the findings, we identify key legal and practical risks and develop an action plan to help mitigate potential employment disputes, penalties and reputational risks.
We help organisations develop or review their job and pay structures to ensure they are transparent, comparable and based on objective, gender-neutral and documentable criteria. In this work, KPMG uses the internationally proven sKale Job Grading methodology, which helps organisations establish a clear job architecture, determine the relative value of roles within the organisation, define career levels and link them to market-aligned pay ranges.
We also help organisations document the criteria used to determine and develop pay, ensuring that these criteria are clear, comprehensive and practical to apply. At a minimum, the criteria should cover skills, responsibilities, effort and working conditions, while also taking into account pay levels, progression to higher levels, job complexity, competencies and performance.
sKale helps organisations to:
The sKale methodology provides a structured approach to job evaluation, the development of job families, the determination of pay ranges and equal pay analysis. As a result, organisations gain a clear pay architecture and a solid foundation for long-term reward management.
We help organisations establish a practical process for receiving and responding to employee requests for information on individual pay levels and average pay levels, broken down by gender, for comparable categories of workers. This includes defining response timelines, responsible persons, data sources and the format of the response.
We also support organisations in developing an approach to annual employee communications and reviewing internal policies and documents to ensure that they do not unjustifiably restrict employees’ rights to disclose their pay for the purpose of enforcing the principle of equal pay.
We help organisations develop and implement a structured approach to change management, from engaging leadership and HR teams to communicating with employees, employee representatives, trade unions and other stakeholders.
Our support may include process planning, the development of communication materials, the adaptation of internal rules, policies and guidelines, and the integration of new principles into day-to-day processes. This helps ensure that changes are implemented in a considered and credible manner and in line with employment law requirements.
We help organisations prepare for pay gap reporting in a timely manner by putting in place the necessary data, processes and analytical approach. This includes assessing the readiness of existing HR, reward and administrative systems, identifying potential data gaps, and defining the requirements for any necessary processes or systems.
KPMG’s methodology, the sKale tool, and our experience in equal pay matters help establish a reliable foundation for reporting and for determining the appropriate next steps where significant pay differences are identified.
For corporate groups operating across multiple countries, we help develop a consistent approach that also meets local requirements. KPMG’s international network enables organisations to efficiently consolidate and harmonise data across countries and systems, while taking into account differences in national legislation, employment law requirements and the implementation of the Directive.
Is your organisation ready for the new requirements?
If you would like to assess your organisation’s readiness for the requirements of the Pay Transparency Directive or receive tailored advice, please contact KPMG Latvia’s multidisciplinary team:
