From readiness to reality: Building a data foundation for the EU Pay Transparency Directive

For many organisations, the journey toward meeting EU Pay Transparency Directive obligations begins with strategic discussions about equal pay, pay structures, and gender pay gap reporting. However, the actual shift from readiness to measurable compliance happens only when these intentions are translated into functional systems, consistent data, and repeatable processes.

As the deadline to implement the Directive into national law (7 June 2026) is quickly approaching, employers across the European Union are discovering that policy alignment alone does not deliver transparency. The ability to detect pay differences, validate gender-neutral criteria, manage joint pay assessments, and disclose pay information to current and prospective employees is achieved only when HR, payroll, and analytics teams have a shared source of data.

However, many organisations are ill-prepared to meet the challenge. According to a 2024–25 peopleanalytics survey, around 40% of organisations say their HR technology is not well integrated, making it difficult to extract unified data for analysis. Another study found that 74% of organisations reported using more than one payroll system across geographies, illustrating just how fragmented payroll data can become for multi-country operations.

From 2026, robust data management and accurate reports will be critical to safeguard EU businesses from regulatory penalties and employee disputes. Read on to explore strategies to achieve unified data management, and maintain compliance in the age of pay transparency. 

This is the deadline for Member States to transpose the Directive, meaning timelines and obligations may vary locally.

Data collection and governance: The hidden challenge impeding compliance

Effective compliance requires employers to equires employers to demonstrate that female and male workers performing the same job or equal work are paid fairly according to gender neutral criteria. This includes explaining pay levels, salary ranges, complementary or variable components, and the factors used in determining pay or pay progression. To fulfill these regulatory needs, organisations must ensure their payroll data is centralised, structured and error-free.

However, employee master data, pay structures and job definitions are often scattered across various systems managed by separate teams. Many organisations still rely on fragmented pay practices or pay systems that have evolved over time without a cohesive data model. This makes it increasingly difficult to report on the median gender pay gap, identify pay differences, or respond to equal pay inquiries with confidence.

The directive moves compliance beyond policy interpretation and into the domain of data governance, where organisations must:

• Ensure job-evaluation criteria are gender-neutral. This may require the creation consistent pay structures and job families across countries and legal entities.
• Standardise pay information so that average pay levels, pay ranges and job-evaluation criteria are truly comparable.
• Establish clear ownership for how data is created, validated and shared with employee representatives and regulators.

Data is the missing link between intent and outcomes

Many organisations have a high-level understanding of their obligations under the EU Pay Transparency Directive. However, the underlying data structures often tell another story. As the Directive shifts expectations from intent to evidence, employers must demonstrate that pay structures and outcomes align with the principles of equal pay and gender-neutral criteria. 

When data is inconsistent or siloed, it becomes difficult to explain observed pay gaps, address potential gender bias, or generate high-quality data required for transparent pay practices. Once pay transparency regulations go into effect, data won't just be an enabler of compliance; it will be the central mechanism through which fairness, accountability and trust are validated.

Common issues include:

• Job titles or role descriptions that differ between entities or countries, making comparison difficult.
• Pay systems where variable components (bonuses, allowances, overtime) operate separately from base salaries, making totals incomparable. 
• Employee data where gender, contract type, or hours worked are missing or inconsistent, preventing accurate calculation of pay differences or median gender pay gap.

Ensuring pay equity through data: Essential steps for EU countries

Achieving alignment with EU pay transparency requirements depends on a comprehensive data model that links job design, pay structures and workforce demographics. Several dimensions shape an organisation’s readiness:

1. Standardised job architecture and pay ranges

A consistent job architecture is essential for assessing equal work and work of equal value. Organisations that operate without aligned job levels, grading frameworks or salary bands face difficulties comparing pay across male and female workers or determining whether similar work receives similar pay. 

Standardised job families and clearly defined pay ranges improve the comparability of roles and provide the foundation for detecting structural pay gaps.

2. Integration of all pay components

Reliable compliance reporting requires the inclusion of all relevant pay components from base salary to bonuses, allowances, overtime and other variable pay. Disconnected systems or inconsistent capture of complementary pay elements generate incomplete pay profiles that obscure real pay differences. Additionally, there should be alignment in variable pay definitions across legal entities. 

Consolidated pay data supports accurate analysis of average pay, pay distribution within salary ranges, and the relationship between pay level and career progression.

3. Robust workforce and demographic data

High-quality gender pay gap reporting depends on consistently captured demographic and employment data. Information on gender, working hours, contract type, employment status, location, tenure and job level provides the context needed to evaluate pay progression, identify gender-based patterns in the labour market, and determine whether pay inequalities are linked to structural factors. Strong demographic data improves both compliance and insight.

4. Governance, data quality and auditability

Transparent pay practices require clear internal governance. Organisations benefit from defined ownership of data collection, validation processes, documentation of pay systems, and accessible audit trails. 

This level of structure supports interactions with employee representatives, national law requirements and regulators. Strong governance also mitigates risk in equal pay claims by ensuring pay decisions are traceable to objective, gender-neutral criteria.

5. Cross-border consistency for EU member states

Multinational organisations encounter an additional challenge: aligning data formats, classifications and pay structures across EU member states. Because national legislation must be transposed by 7 June 2026, organisations operating across multiple EU countries must already align job definitions, pay-structures and data-reporting frameworks to eliminate unexpected compliance risks.

Differences in national legislation, local job families, or currency standards complicate the consolidation of gender pay gap data. Harmonised data structures create a cohesive foundation for pan-European reporting and strengthen an organisation’s ability to identify and address pay inequalities across regions.

From compliance to confidence: Operationalising EU pay transparency

Organisations that successfully operationalise pay transparency laws typically progress through three key stages.

These stages build a comprehensive framework for pay equity by first identifying and cleansing data sources, then designing a unified data model linking jobs, employees, and pay components, and finally enabling automated reporting and governance. A long-term strategy for data management ensures sustainable compliance and fosters trust in transparent pay practices.

By approaching operationalisation as a structured, multi-phase process, organisations position themselves to meet national legislation requirements, protect workers’ rights to equal pay for equal work, and prepare for evolving expectations around gender equality, pay systems, and workforce reporting. The result is a sustainable model that improves pay transparency, enhances organisational credibility, and supports long-term compliance across the European Union.

How Zalaris helps organisations across the European union

The EU Pay Transparency Directive represents a major shift in how organisations think about pay equity, fairness and transparency. It not only aims to protect workers but also to encourage employers to view accurate pay data as a strategic asset.

Those who act now, invest in data foundations and foster truly transparent pay practices will move beyond simple compliance. They will gain a deeper understanding of their workforce, strengthen trust with employees, close the gender pay gap, and ultimately deliver better business outcomes.

Zalaris can help you bridge the gap between EU pay transparency readiness and real implementation. Our approach brings together HR data, payroll expertise and SAP SuccessFactors capabilities to:

• Cleanse and align workforce data across regions.
• Standardise pay practices and ensure transparent pay practices that comply with the Directive.
• Build governance frameworks that maintain ongoing data quality.
• Configure SuccessFactors'n native functionality to support Directive compliance 

Get in touch with our team of experts to get started.