EU Pay Transparency Directive: What It Really Changes for HR Directors on SAP HCM
Transposition deadline
Each European Union member state must have transposed Directive (EU) 2023/970 into its national law before this date.
For HR departments, this deadline may seem far away. It is not. Correcting pay gaps, structuring a reporting process, preparing teams to handle individual employee requestsall of this takes time. And the necessary data must be operational by June 2026, as measurement systems must be in place by that date to generate the data rigorously.
This article gives you a practical look at what the directive requires, why it is more demanding than it seems, and how companies relying on SAP HCM can turn this constraint into an advantage.
Why this directive is different from previous ones
Directive 2023/970 aims to strengthen the enforcement of the principle of equal treatment between men and women. Its purpose is to increase pay transparency within companies, facilitate the application of concepts, and improve victims' access to justice.
But what fundamentally distinguishes it from previous texts is its central mechanism: the reversal of the burden of proof.It is now up to the employer to demonstrate the absence of discrimination. It is no longer up to the employee to prove that they have been wronged.
It reiterates that equal treatment must apply to the entire remuneration package,including variable or supplementary components. This point is essential because inequalities often develop in salary accessories.
In other words, reporting that only covers base salary is not compliant. The directive targets total remuneration: fixed pay, variable pay, bonuses, benefits-in-kind, and contributions to supplementary schemes.
What the directive concretely requires
Starting from recruitment
All companies, starting from their very first employee, will be concerned by obligations such as displaying a salary range in job postings or employees' right to information on remuneration criteria.
As of June 7, 2026, all job listings must include a precise salary or pay range before the selection process even begins. Vague phrasing like « rémunération selon profil » or « salaire à négocier » without associated figures will no longer be acceptable. This obligation applies to all distribution channels: job boards, LinkedIn, careers pages, and any medium where a job posting is published.
It will also be prohibited to ask candidates about their salary history. Pay setting must be based on the role's duties and responsibilities, not on what the candidate earned with their previous employer.
Internally
The employer must make available to employees the criteria used to determine remuneration, pay levels, and pay progression.
Each employee will be entitled to request average remuneration levels broken down by gender for categories of workers performing equal work or work of equal value. However, employees will not have the right to request information on their colleagues' individual pay: what is at stake is the average remuneration by category, not individual data.
Periodic reporting
This is where the stakes are highest for large organizations. Companies with more than 250 employees must submit annual reports to the competent national authority detailing pay by gender, displaying the criteria used to determine remuneration. They will also be required to correct any pay gap exceeding 5%.
| Company size | Reporting frequency | First deadline | Données portées | Mandatory correction |
|---|---|---|---|---|
| 250 employees and over | Annual | June 7, 2027 | Calendar year 2026 | Yes, if the variance is >5% and not justified. |
| 150 to 249 employees | Every 3 years | June 7, 2027 | Calendar year 2026 | Yes, if the variance is >5% and not justified. |
| 100 to 149 employees | Every 3 years | June 7, 2031 | Previous calendar year | Yes, if the variance is >5% and not justified. |
| Fewer than 100 employees | Voluntary | No obligation | — | Non-mandatory |
Regarding the 5% threshold: a pay gap may be accepted if it is justified by objective, gender-neutral criteria, such as seniority, skills, or performance. However, the burden of proof lies with the employer, who must provide robust documentation rather than a mere declaration.
⚠ PENALTIES FOR NON-COMPLIANCE
- Administrative fines proportional to the payroll or flat-rate fines depending on the severity of the infringement
- Exclusion from public procurement contracts
- Loss of public subsidies and incentives
- Aggravating circumstances in the event of repeat offenses
What this requires from your HR system
The directive is not limited to a publication obligation. It imposes a permanent evidentiary capability. Your remuneration data must be:
Exhaustive
All components, not just fixed pay
Reliable
Consistent with pay slips and statutory declarations
Traceable
Generated directly from the master system, not reconstructed in a spreadsheet
Actionable on demand
To respond to employees as well as authorities
for HR managers, the challenge is twofold: ensuring rigorous legal compliance making every effort to genuinely reduce the wage disparities that still persist behind cosmetic measures.
For companies using SAP HCM: a head start, provided it is activated
If your company uses SAP HCM, that is great news: a payroll system that already records all remuneration components, with a level of detail and reliability that matches exactly what the directive requires. Base salary, bonuses, benefits, overtime, retroactive corrections, everything is there, produced every month with the same precision as a pay slip.
The question is not about collecting new data. It is about making them accessible to HR teams in the correct analysis format, directly from the source system.
What HR-Reports covers
HR-Reports is an integrated HR and Payroll reporting solution for SAP HCM, designed to enable HR, Payroll, and Social Controlling teams to fully leverage their SAP data without requiring custom development.
By centralizing administrative, organizational, time management, and payroll data within a single environment, HR-Reports simplifies the production of HR reporting and guarantees reliable, consistent analyses directly aligned with the results calculated by SAP.
Here is how it meets the requirements of the directive:
Calculation of the gender pay gap
In SAP, an employee's salary and their gender do not belong to the same data universe. Reconciling them manually is tedious, error-prone, and difficult to audit. HR-Reports automates this cross-referencing and produces directly usable mean and median gaps.
Breakdown by category of equivalent work
The directive does not ask for an overall gap. It requires a gap by comparable job or work. HR-Reports makes it possible to structure analyses by segment and category in order to respond precisely to this requirement.
Identifying gaps > 5 %
Any gap exceeding 5% between women and men must be analyzed. HR-Reports automatically highlights the categories requiring in-depth analysis.
Tracking trends over time and simulating corrections
Measure the progression of gaps over time and simulate the budgetary impact of corrective actions before their implementation.
Where to start
Structuring your indicators ahead of the deadline means avoiding the rush of 2026, but it also means building more robust long-term HR management. Pay transparency is not a one-off constraint; it is a new permanent requirement. It is best to prepare for it methodically.
