EU Pay Transparency Directive: A Readiness Guide

The EU Pay Transparency Directive (2023/970) is about to reshape how organisations manage and report on pay equity. For business leaders and HR teams, this isn’t just another regulatory hurdle – it’s a real opportunity to build trust and fairness across the company.

This guide gives employers a clear path to compliance, showing what to expect, how to prepare, and how a digital HR and payroll system like Talexio can help you get there with less stress and more confidence.

Key Dates and Requirements

Directive Adopted: 10 May 2023
Transposition Deadline: 7 June 2026

Gender Pay Gap Reporting Deadlines (Article 9 of the EU Directive):

250+ employees: Annual reports starting 7 June 2027
150–249 employees: First report 7 June 2027, then every 3 years
100–149 employees: First report 7 June 2031, then every 3 years

It’s important to note that even smaller organisations, those with fewer than 100 employees, are not exempt from the core obligations of the Directive. While these companies do not have mandatory reporting deadlines, they are still required to maintain fair and transparent pay practices. The burden remains on all employers, regardless of size, to prove that their pay criteria and processes are objective and non-discriminatory if challenged.

The New Standard: Fair, Transparent, and Trackable Pay

The Directive requires employers to create pay structures based on objective, gender-neutral criteria. These criteria should be easy for all employees to access. Employers must move away from informal pay-setting methods. They need documented systems for determining pay and progression for workers doing the same job or work of equal value. Not doing this can lead to complaints, regulatory scrutiny, and fines.

This change is challenging for organisations because many still use manual records, spreadsheets, or verbal agreements. These methods make it hard to give quick, accurate answers to employee questions or audits. The Directive demands up-to-date, accessible, and well-documented pay records. This is nearly impossible with paper-based manual systems.

Readiness Checklist for Employers

Assess Current Pay Practices: Start by reviewing your existing pay structures, salary bands, and how pay decisions are documented. Identify any inconsistencies or unexplained differences, and develop a clear plan to address and align them, even if you don’t have a reporting obligation.
Recruitment Transparency: Disclose salary or a pay range before job interview, remove questions about a candidate’s pay history, and ensure gender-neutral job descriptions and interviews. Job titles and vacancy notices should be gender-neutral. Also, recruitment processes must be fair and non-discriminatory.
Pay-Setting Criteria: Document and make accessible objective, gender-neutral criteria for pay decisions.
Information Request Process: Create a procedure for employees to request pay info and respond within two months. Train managers on compliant discussions.
Gender-Neutral Job Architecture: Develop, document and implement a gender-neutral job evaluation and classification system that assesses which roles involve “work of equal value”. This system should be based on criteria like skills, effort, responsibility and working conditions.
Data and HRIS Upgrades: Ensure the HR system can capture and categorise all components of “pay” as defined by the Directive: gross basic salary plus complementary or variable components (e.g., bonuses, overtime, allowances, benefits in kind). The system must be able to provide data for the required reporting reference period (one calendar year).
Gender Pay Gap Reporting: Determine headcount annually and prepare for your first report by June 2027 (covering 2026 data).
Joint Pay Assessment Preparation: A joint pay assessment is required when three conditions are met: the pay report shows a gender pay gap of at least 5% in any worker category, the employer cannot justify this gap with objective, gender-neutral criteria, and the employer has not corrected it within six months after submitting the report. If all apply, the employer must involve workers’ representatives to analyse and address pay differences. The six-month window allows time to resolve issues before the assessment is triggered.
Policy and Contract Updates: Eliminate pay secrecy clauses from employment contracts and policies. Workers should be able to disclose their pay to uphold equal pay. Implement strong anti-retaliation measures to safeguard workers exercising their rights under the Directive.
Training and Communication: Train all HR, recruiters, and managers, and inform employees of their new rights.
Governance and Oversight: Assign an executive sponsor and project team, and schedule quarterly reviews.

Download our practical EU Pay Transparency Directive Compliance Checklist (PDF) to guide your HR team step-by-step and ensure nothing is missed on your journey to compliance.

Digital HR: The Smart Path to Compliance

Manual, fragmented systems can’t meet today’s demands. Errors often happen when HR and payroll data are in separate systems or scattered across spreadsheets and emails. A unified HR and payroll platform, like Talexio, lays the groundwork for compliance. It centralises employee, job, and pay data into one system. This consolidation is vital for data integrity and accessibility. These are key for any pay equity analysis and reporting.

Key Talexio Modules and Their Compliance Benefits:

Applicant Tracking System: The ATS can be configured to include fields for salary range information to be used in the recruitment process. Storing this data helps streamline compliance with transparency requirements.
Job Library: Talexio’s HR module serves as a central repository for documenting job descriptions, grades, and pay criteria, and also lets you create custom categories and grades that can be directly assigned to employees. This ensures every employee’s role, category, and pay framework is clearly tracked.
Employee Self-Service Portal: The ESS portal allows employees to access their personal information, including their own payslips.
Payroll Engine: Tracks all pay elements for accurate data collection, which is the first step in analysis and reporting.
Reporting: The system includes standard reporting tools that can generate salary reports.
Audit Logs: Time-stamped records of every change provide traceability for internal reviews and audits.
Performance & Goals: The performance management module is designed to track individual or team goals.
Document Management & e-Signature: Quickly updates and tracks policies and contracts to ensure new transparency and anti-retaliation clauses are distributed and acknowledged.

From Setup to Ongoing Confidence: Your Action Plan

Success starts with assigning project ownership and building a cross-functional team (HR, Legal, Finance), led by an executive sponsor. Next, conduct a thorough audit of your HR and pay data, ensuring that every job role and all components of remuneration are accurately captured in a centralised system like Talexio.

The most critical step is to develop or refine your job evaluation and classification system using gender-neutral criteria. This is the foundation for all other compliance activities. Once established, use this framework to configure your job library.

Update your recruitment processes and vacancy templates so that salary ranges are disclosed at the appropriate time, and remove pay secrecy clauses from contracts and handbooks. Prepare a clear process for handling employee information requests.

Continuous Compliance: Building Lasting Trust

Staying compliant isn’t about a single report or policy update. The Pay Transparency Directive requires a culture of ongoing transparency. This means conducting regular internal audits of your pay data, scheduling data collection for reports, and keeping policies updated.

Digital tools like Talexio can support these routines by providing a centralised and secure database, making you better prepared for an audit or employee question, and helping you build trust.

What sets successful companies apart is proactive preparation. Don’t wait for the last minute. Start reviewing your pay structures, documenting your processes, and leveraging digital tools now. Manual methods are no longer enough. By using a platform like Talexio as your foundational system, you not only make compliance more achievable and efficient, but you also build a more open, fair, and attractive workplace.

Get started early. Automate where you can. Document everything. This is how businesses can turn the EU Pay Transparency Directive into a source of strength and simplicity, not a source of stress.

Don’t let compliance catch you by surprise.
Get your EU Pay Transparency Readiness Checklist (PDF) now – download the free PDF and make sure your HR team is fully prepared for every milestone and requirement.