According to Eurostat, the unadjusted gender pay gap across the European Union stood at 11.1% in 2024 (Eurostat, indicator sdg_05_20). A figure that has barely moved in decades, despite the principle of equal pay for equal work being enshrined in European treaties since 1957. To move beyond declarations of intent, the European Parliament and Council adopted Directive (EU) 2023/970, published in the Official Journal of the EU on 17 May 2023 (L 132).
Transposition deadline: 7 June 2026. Member states were required to incorporate this directive into national law by that date. First mandatory reports for companies with 250 or more employees: 7 June 2027. For HR and IT leaders, this is a wake-up call: the directive doesn’t just introduce new reports — it specifies concrete functionality that your HRIS must deliver natively or through add-on modules.
Directive 2023/970 in brief: what changes for European employers
From principle to obligation: a structural regulatory shift
Directive 2023/970 doesn’t create a new right. It provides enforcement tools for an existing principle: equal pay for equal work or work of equal value. What changes is the obligation to prove that equality, not merely declare it. Employers shift from declarative compliance to data-driven compliance.
Concretely, the directive introduces four structural obligations: pay transparency at hiring, individual information rights for employees, gender pay gap reporting, and joint evaluation when an unexplained gap exceeds 5%.
Timeline: who is covered and when
The implementation schedule is staggered by company size:
Companies with 250 or more employees
- First pay transparency report: 7 June 2027 (covering 2026 data)
- Frequency: annual
Companies with 150 to 249 employees
- First report: 7 June 2027
- Frequency: every three years
Companies with 100 to 149 employees
- First report: 7 June 2031
- Frequency: every three years
Companies with fewer than 100 employees
- Voluntary reporting, though member states can extend obligations through national law
For mid-sized European companies in scope from 2027 onwards, the operational window is tight. The reference data will be from 2026 — the year already underway. If your HRIS isn’t configured to collect the right data today, you will be behind when the first deadline arrives.
Penalties for non-compliance
The directive requires member states to establish effective, proportionate and dissuasive penalties. The text explicitly references fines that may be calculated as a percentage of annual turnover or total payroll. Repeated violations attract aggravated sanctions. Member states retain discretion over exact amounts, but none has an incentive to leave the directive toothless: the European Commission will oversee implementation.
The 4 main obligations that impact your HRIS
Obligation 1 — Pay transparency at hiring
Before or at the first interview, candidates must receive the salary range or initial pay intended for the role. Employers are explicitly prohibited from asking candidates about their salary history.
For HR teams, this means every job posting must include a formalised salary range. This information must be accessible in the ATS (Applicant Tracking System), whether integrated into the ERP or standalone. If your HRIS manages recruitment, verify that the “salary range” field is mandatory in the job opening form.
Obligation 2 — Individual right to information
Any employee may request from their employer average pay levels by work category, broken down by gender. The employer must respond within two months. Management must inform all employees of this right, at least annually.
This right creates a traceability obligation. Each request must be logged with its date, the response given, and the data shared. Your HRIS must be able to produce these statistics on demand — without manual work in spreadsheets.
Obligation 3 — Gender pay gap reporting
This is the most technically demanding obligation. Employers must calculate and publish several indicators:
- Gross pay gap: difference between the average pay of all men and all women, expressed as a percentage
- Median pay gap: same calculation but on median values
- Complementary pay gap: bonuses, variable pay, and benefits in kind, broken down by gender
- Distribution by pay quartile: share of women and men in each quartile (Q1 to Q4)
- Gap by work category: “work of equal value” is assessed against objective criteria (qualifications, skills, responsibilities, working conditions)
The adjusted calculation goes further: it isolates the unexplained gap by controlling for legitimate factors (job level, seniority, working hours). Both metrics — unadjusted and adjusted — are required.
Obligation 4 — Joint evaluation when the gap exceeds 5%
If the report reveals an unjustified pay gap greater than 5% in any work category, and that gap is not remedied within six months, the employer must carry out a joint evaluation with employee representatives. This evaluation must identify the root causes of the gap and define a corrective action plan.
What your HRIS must be able to do to comply
Store and export pay data at the required granularity
The first obstacle is data quality. The directive requires calculating gaps by work category, gender, seniority, and quartile. If your HRIS stores salaries but lacks a “gender” field (or it is empty for 20% of records), or your job categories don’t map to the concept of “work of equal value”, you cannot generate the required indicators.
Minimum features to verify in your HRIS:
- Gender field on the employee record (with capability to handle non-disclosure cases in line with GDPR)
- Job classification by homogeneous work category
- Pay history with effective dates
- Pay decomposition: base salary, recurring bonuses, discretionary bonuses, benefits in kind
Calculate gross and adjusted pay gaps
The calculation engine must be native or accessible via an add-on. Manual calculations in spreadsheets are not an option: they are time-consuming, error-prone, and impossible to audit.
Ask your HRIS vendor whether the system natively calculates:
- Overall mean and median pay gap
- Gap by pay quartile
- Gap by work category
- An adjusted gap with configurable control variables
If your HRIS cannot do this, a BI module (Power BI, Tableau, Qlik) connected to the HR database can fill the gap — but this requires serious data modelling and strict data governance.
Generate the annual pay transparency report
The report must be published according to the modalities defined by each member state (likely via an official portal, similar to the UK Gender Pay Gap reporting portal). Your HRIS must be able to export data in a standardised format and record the date of each publication.
Log individual information requests
Each employee request must be recorded: who asked, when, what response was given, and what data was shared. This log must be accessible for audit in the event of a dispute or inspection.
Manage data privacy (GDPR)
Pay data is sensitive personal data. Aggregate reports must be anonymised: the directive prohibits identifying individuals through published statistics. In practice, categories with fewer than five employees of one gender are masked or aggregated.
Your HRIS must apply these rules automatically to prevent a misconfigured report from indirectly revealing the salary of an identifiable individual.
HRIS and HCM platforms addressing 2023/970 compliance
Workday: Pay Equity module and dedicated analytics
Workday offers a Pay Equity module built into its HCM suite. It calculates the adjusted gap using a configurable statistical methodology, identifies at-risk categories, and generates publication-ready reports. The analytical depth is genuine, but licensing and implementation costs are significant — Workday targets large enterprises.
SAP SuccessFactors: Compensation and Workforce Analytics
SAP SuccessFactors integrates Compensation and Workforce Analytics modules capable of producing the directive’s required indicators. The breadth of the SAP suite allows tight integration with financial data. However, configuring pay equity reporting requires a multi-month project and specialist consultants.
Sage People: gender pay reporting
Sage People (formerly Fairsail) has well-developed gender pay reporting capabilities, built largely for the UK market where Gender Pay Gap Reporting has been mandatory for private-sector employers since 2017. These features translate naturally to the Directive 2023/970 framework, though maturity varies by product version and country configuration.
Cegid Talentsoft: Compensation module
Cegid Talentsoft’s Compensation module centralises pay data and enables comparisons by role. Its ability to generate the specific indicators required by Directive 2023/970 depends on work category configuration and the regulatory updates Cegid rolls out as member states refine their national requirements.
Odoo and mid-market HRIS: limitations to plan for
Mid-market HRIS platforms like Odoo Community cover core administrative functions (payroll, leave management, employee records), but lack a native pay equity calculation engine. For these tools, compliance requires a BI connector: export HR data to Power BI or Tableau, model the indicators, then produce the report outside the HRIS. This is workable but demands technical expertise and a data governance framework that many SMEs don’t currently have.
Steps to bring your HRIS into compliance
Step 1 — Audit the quality of your current HR data
Before thinking about software modules, verify that your data is usable. Run an employee data extract and ask: is the gender field populated for all active employees? Are job categories consistent and exhaustive? Are pay components (base, recurring bonuses, variable pay, benefits) properly separated in the HRIS?
A data quality audit upfront saves considerable time when configuring reporting.
Step 2 — Map job categories to “work of equal value”
The concept of “work of equal value” is the cornerstone of gap calculations. It requires grouping roles by objective criteria: required qualifications, task complexity, managerial responsibilities, and working conditions. This classification is fundamentally an HR exercise, not an IT one — but its outcome must be reflected in the HRIS job nomenclature.
Step 3 — Configure or acquire the pay equity module
Once data is clean and categories are defined, configure the calculation module. If your HRIS doesn’t offer this natively, evaluate the options: a vendor add-on, a specialist solution (Trusaic, Syndio, PayAnalytics) connected via API, or an internal BI approach.
Step 4 — Train HR leaders and managers
The individual information right creates new situations. A line manager may receive a request from a team member asking about pay levels in their category. They need to know how to respond, how to log it in the HRIS, and what information they can and cannot share. A short training session (2 to 3 hours) is sufficient, but it is essential before go-live.
Step 5 — Test the report before the first deadline
The June 2027 report will cover 2026 data. Don’t discover data problems in May 2027. Plan a full dry run at end-2026: extract the indicators, check consistency, simulate anonymisation for small categories, and validate with your HR director and DPO.
Checklist: is your HRIS ready for Directive 2023/970?
Ten practical checkpoints before the June 2027 deadline:
- Gender field populated for all active employee records
- Consistent job categories mapped to the “work of equal value” concept
- Pay decomposition (base + bonuses + benefits) stored natively in the HRIS
- Salary range mandatory in the job opening process (ATS)
- Pay equity calculation module available: mean gap, median gap, by quartile, by category
- Adjusted calculation possible with controllable explanatory variables
- Individual request log with date/response/data shared traceability
- Automatic anonymisation for categories with fewer than 5 employees per gender
- Standardised export of the annual report in the format required by the national authority
- DPO consulted on pay data governance in relation to GDPR
Directive 2023/970 is part of a broader movement toward social data transparency. Gender pay gaps are also part of the ESG indicators under the CSRD standard (category S1 — own workforce), meaning companies subject to both frameworks will produce partially overlapping data. Structuring your HRIS for Directive 2023/970 therefore gives you a head start on your ESG reporting as well.
To explore further, see our guide on HR modules in ERP systems — integrated HRIS vs dedicated modules, our HR planning and payroll budgeting guide, and our CSRD and sustainability reporting ERP analysis.
