IRIS Software: pay transparency rules risk exposing loyalty penalty

IRIS Software Group has published research suggesting that proposed UK Government rules requiring employers to publish salary information in job adverts could expose a widespread "loyalty penalty," where experienced employees find their pay has converged with that of new starters.

The study, conducted by Censuswide among 511 senior HR professionals and 500 employees who have been in full-time work for between two and five years, found that 37% of early-career workers believe experienced junior staff should earn more where the gap with new-starter salaries has narrowed significantly. A further 36% want employers to review existing salaries before advertising any new vacancy.

The employer-readiness gap

Despite the Government's consultation closing on 27 October 2026, preparedness among employers remains uneven. While 89% of senior HR leaders describe their organisations as at least "mostly prepared" for potential salary-publishing obligations, fewer than half (43%) say their pay bands are ready to publish. One in nine (11%) say their organisation is simply not prepared.

The research also points to a meaningful disconnect between employee expectations and employer intentions. Four in ten employees (39%) want to understand how experience, performance and responsibility influence pay, yet only 25% of HR leaders say their organisations plan to explain salary progression methodology. Similarly, 36% of employees want existing salaries reviewed before a vacancy goes live, but only 24% of HR leaders plan to carry out such a review. And while 33% of employees want the right to request a pay review, just 21% of HR leaders intend to offer one.

Stephanie Kelly, Chief People Officer at IRIS Software Group, said: "Publishing the salary is the straightforward part. Employers will also need to be able to explain why people are paid what they are, and stand behind those decisions."

A further operational challenge is data readiness. More than one in five (22%) senior HR leaders acknowledged their current HR systems and workforce data cannot compare advertised new-starter salaries with the pay of existing employees, a basic analytical task that transparency rules would make operationally essential.

Market and regulatory context

The proposed rules apply to employers across England, Scotland and Wales and are still subject to consultation, meaning final obligations, scope and enforcement timelines have not yet been confirmed. The direction of travel mirrors broader European moves: the EU Pay Transparency Directive, adopted in 2023, requires member states to legislate by June 2026 and sets enforceable rights around pay information requests, gender pay reporting and burden-of-proof reversals in discrimination claims.

For HR software vendors, mandatory pay transparency represents a commercial tailwind. Systems that can connect recruitment, HR and payroll data to produce auditable pay-band analyses are positioned to attract buyers scrambling to comply. IRIS Software Group, which claims its payroll software is used to pay one in six UK employees, has an evident interest in accelerating that upgrade cycle. Enterprise HR platform vendors including SAP SuccessFactors, Workday and Oracle HCM are competing in the same space, and a wave of specialist pay-equity analytics startups has emerged alongside them.

Employers that move early to audit internal pay structures will likely face fewer costly conversations when job adverts go live with salary ranges; those that wait risk discovering loyalty-penalty gaps only once they become visible to the workforce.