The EU Pay Transparency Directive: What Nordic companies urgently need to prepare for

The EU Pay Transparency Directive requires more than compliance. It demands a robust foundation of levelling frameworks and transparent structures. But where do you start when building this from scratch?

In this interactive session Trine Palm, Global People Director, shared Formalize's journey from concept to implementation, demonstrating how a well-designed levelling system becomes the backbone of pay transparency and EUPTD readiness.

You can see how Formalize built their IC and management tracks, introduced sub-levels for career progression, and used these structures to power their compensation decisions through Ravio – making salary bands, gender pay gap monitoring, and defensible pay decisions a practical reality.

Key takeaways from the webinar

Building a levelling framework

Formalize uses a standard IC (Individual Contributor) model, with levels running from IC0 (students) through to senior ICs, running in parallel with a management track (M1, M2, M3 etc).

A few standout design decisions:

IC and management tracks are fully aligned. IC3 and M1 sit at the same level and within the same salary band. The philosophy behind this is deliberate: becoming a manager should never be an economic decision. If someone moves from a senior IC track into management, they are assessed against the management levelling criteria, which may result in a lower level placement. This is treated as a new specialisation, not a demotion.

Sub-levels within each band. Each IC level contains three sub-levels: Learning, Thriving, and Role Model. Employees can progress through these every six months via a bi-yearly promotion round, with each sub-level move representing a 3 to 5% salary increase. Moving up to the next full IC level carries a larger increase, with at least 10% between bands. This is particularly well suited to younger, fast-moving teams who value visible career progression.

Progression is skills-based, not tenure-based. Raises are tied to demonstrated increases in influence, autonomy, and complexity. Time in role does not earn a salary increase on its own.

The Levelling Matrix

The framework is built around three core dimensions assessed at every level:

• Influence: What is the scope of your impact on the company?
• Autonomy: To what degree are you operating independently?
• Complexity: How sophisticated are the problems you are solving?

These dimensions are consistent across all departments. What changes by role is the output and quality criteria in the middle of the matrix. Two further themes, initiative and ownership and collaboration and teamwork, remain consistent across all roles and levels.

For leaders specifically, the levelling criteria maps directly to Formalize's company values, making the link between culture and career progression explicit.

Pay transparency at Formalize

Formalize operates with full salary band transparency. All employees can see all salary bands across all departments. While individual salary is not publicly disclosed, the combination of visible bands and sub-levels means employees can broadly infer where colleagues sit.

Trine's view: this creates calm rather than friction, particularly in a young organisation where employees prioritise fairness and clarity over individual advantage.

On handling small cohorts in pay gap reporting, her advice was practical: make sure you have sub-level increments to report against, rather than just full bands. This allows you to give employees meaningful pay information without disclosing individual salaries.

EU Pay Transparency: What to expect

A brief overview of the current landscape:

• Denmark is currently targeting 2027 for implementation, with companies under 200 employees likely reporting every three years rather than annually
• Regardless of national timelines, employees already have the right to pay information
• Pay gap reporting, fair pay reviews, and salary transparency on job postings are all coming. Trine's expectation is that salary ranges on job adverts will begin appearing across markets from 2026 onwards
• The message: do not wait for your country's implementation deadline to get your foundations in place

Why Formalize chose Ravio

• Live benchmarking matters more than annual reports for a fast-scaling team. Roles and levels change too quickly for a look-back snapshot to be useful.
• Empowering leaders to have salary conversations without escalating to the People Director every time. Visibility into benchmarking data gives managers the confidence to lead these discussions themselves.
• HiBob integration keeps salary data automatically in sync.