Your salary is about to become a lot less private. Are your managers ready for that conversation?

Brussels wants the EU Pay Transparency Directive live by June 2026. The Netherlands asked for more time. Brussels said no. So somewhere between now and 2027, every manager in this country is going to sit across from a direct report who knows, with far more precision than before, what their role is worth on paper versus what's in their bank account.

That is not an HR problem but rather a performance review problem. And most managers are not trained for it.

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The collision course

Performance review season and pay transparency were always going to meet eventually. Now they're meeting on your calendar this cycle.

Here's what changes: right now, when a manager tells someone "you're doing great, but the budget doesn't allow for a bigger increase this year," that lands as a somewhat abstract disappointment. Once pay bands, ranges, and progression criteria are visible, which is exactly what the directive requires, that same sentence lands as a fact-check. Your people will walk in with the number. You need to walk in with more than a budget line.

And this will hit hardest in the roles where "what the role entails" and "what the market pays" have quietly drifted apart, which, if we're honest, after two years of hiring freezes, cheap internal promotions, and market rates moving faster than comp bands, most companies have more of those roles than they'd like to admit.

In my own career as a leader, I've sat on both sides of this table more times than I can count. I've had reviews where someone walked in convinced they were underpaid, and walked out still not thrilled about the number but clear on why it was what it was, and what would change it. Those are the good ones. 

I've also had reviews that went the other way, where I knew the person had a point, but the budget genuinely wasn't there, and no amount of framing softened that. 

Those conversations don't fail because the answer is "no." They fail when "no" arrives without a "here's what has to be true for that to change," or when I've let the conversation drift into justifying the company's constraints instead of being honest about them.

The ones I'm proudest of weren't the ones where I found extra budget. They were the ones where I said, plainly, "I hear you, this is a real gap, I don't have room to close it today, here's what I'm going to do about it and by when." 

The ones I regret are the times I softened that message to make the room feel better in the moment, which almost always cost more trust later than a direct answer would have up front.

That's the pattern I've seen hold, cycle after cycle: clarity beats comfort, even when clarity means saying no.

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Why "I don't set the budget" doesn't work as an answer

While it’s the truth, it's not going to hold up in the room. 

If a manager's only move is to point upward and say "that's not my call,” three things happen fast: trust erodes, the manager looks powerless rather than principled, and the conversation shifts from development to grievance. None of that is reversible by the next payroll cycle.

Handling this well has nothing to do with the size of a manager's budget. It comes down to three things a manager can do in the same fifteen minutes:

1. Separate role value from personal value, out loud: Pay transparency exposes pay bands, not performance. A manager who can clearly distinguish "this is what the role is benchmarked at" from "this is how I rate your contribution" gives the employee something concrete to act on, instead of a number to resent.

2. Turn the gap into a growth conversation, not a defense: If someone is genuinely underpaid for the scope they're already carrying, say that plainly and put a plan against it: timeline, milestones, what triggers the next review. Vague reassurance is worse than a hard truth with a date attached.

3. Hold the line without going cold: Budget constraints are real. Managers still need to deliver "not now" without it sounding like "not ever." That's a skill, not a personality trait, and it's one most managers have never explicitly practiced, because until now they've rarely had to defend a number the other person could see.

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Where this actually gets built

Pay transparency is going to push a lot of managers into conversations they've never had to have out loud before. A comp philosophy document won't get anyone through that conversation. A manager who can actually run it will.

This is exactly the kind of conversation we design for in Lepaya's Power Skills programs, specifically the modules on difficult conversations, feedback, and coaching for performance. Not "communication skills" in the generic sense. Practiced, behaviour-change reps: manager gets a scenario close to what they'll actually face, tries the conversation, gets direct feedback, tries it again. Learn, Practice, Apply - not a slide deck about empathy.

If you're building your 2026 manager enablement plan, this is the moment to put "compensation conversations under transparency" on the list, before your people bring the spreadsheet to you first.

Note: the Netherlands has requested a delay to January 2027, but the European Commission has rejected that postponement and expects implementation across all member states by June 2026. The exact Dutch timeline is still moving, but the pressure on managers isn't.