EU pay transparency is coming. Is your SAP SuccessFactors ready?

The directive establishes five core requirements: publishing pay ranges in job advertisements, documenting gender-neutral pay criteria, responding to employee information requests within two months, reporting annual gender pay gaps, and remediating unexplained disparities above 5%. Each obligation requires traceable data, auditable workflows, and cross-functional governance.

For SAP SuccessFactors customers, many of the core capabilities needed to support pay-transparency workflows already exist. The challenge is less about functionality and more about orchestrating configuration, data, governance and processes across the suite. Most organisations have not fully connected Employee Central, Recruiting, Compensation, People Analytics and their payroll environments into a coherent transparency and reporting framework. This gap creates risk - but it also creates an opportunity to standardise data, strengthen governance, and activate existing capabilities more effectively.

The compliance reality: high awareness, low readiness

Research from Mercer's Pay Transparency Survey 2024 shows that over 80% of large EU employers are aware of the directive. Across Europe, readiness varies significantly. Nordic and Western European countries with established pay-gap legislation have a stronger foundation but still need to align job architecture, comparator logic, and reporting processes to EU-level standards. Central European organisations face cross-country data harmonisation challenges, while Southern and Eastern European employers often operate fragmented local payroll systems that complicate consolidated reporting.

National transpositions are progressing at different speeds. Sweden is lowering reporting thresholds, Germany is introducing new enforcement mechanisms, and the Netherlands has delayed its implementation timeline. In practice, some obligations may take effect earlier in certain Member States, and definitions may diverge as national laws evolve. Because of this, many multi-country employers are preparing at an EU-wide level rather than waiting for final local guidance.

Underlying these differences is a consistent issue: awareness does not equal readiness. Fragmented job architectures, inconsistent pay components, multi-vendor payroll environments, and unclear data ownership remain the primary blockers - not a lack of understanding of the Directive itself.

What system readiness actually requires

Pay transparency depends on complete, consistent, and comparable data. Even within integrated SAP landscapes, ensuring alignment between HR, payroll and finance is critical. Pay differences can only be defended if job levels, pay components and workforce attributes are standardised. Readiness requires traceable workflows, consistent application of gender-neutral criteria, accurate analytics and strong governance frameworks across regions. Multi-country operations must harmonise data centrally while maintaining local compliance nuances and integrating multiple payroll vendors where applicable.

SAP SuccessFactors is widely used among large employers affected by the Directive, and SAP has positioned pay transparency as a suite-level scenario. Relevant capabilities include salary-range fields and guardrails in Recruiting Management, enhanced pay-grade data models in Employee Central, gender pay-gap Story templates in People Analytics and contextual transparency features through Joule. However, because only a minority of customers run the full SAP SuccessFactors suite, many organisations will need to extend modules or activate additional functionality if they want to support the Directive natively across recruiting, core HR, compensation and analytics. These capabilities support key transparency workflows but must be underpinned by aligned job architecture, comparator logic and high-quality data structures to be effective.

For organisations running SAP SuccessFactors, the priority is activation, alignment and optimisation. The foundational capabilities are already in the system; readiness depends on how well those capabilities are enabled and integrated across modules, data structures and governance processes.

Activating compliance across the SAP SuccessFactors suite

Many of the Directive’s requirements map to standard SAP SuccessFactors capabilities, particularly across Recruiting, Employee Central, Compensation and People Analytics. In Recruiting, organisations must activate salary-range fields in requisitions and job postings, link those fields to pay-grade data in Employee Central, apply guardrails to prevent out-of-band offers, and update templates to remove salary-history questions. These features support transparency workflows, but their effectiveness depends on aligned pay structures and consistent data.

Employee Central provides the foundation for every aspect of pay transparency. Accurate job, employee, and pay data are critical for reporting and analysis. Organisations should align job frameworks and pay structures with gender neutral criteria, validate demographic and employment data for accuracy and completeness, and integrate HR and payroll systems to ensure a single auditable source of pay data. Whether payroll runs through SAP Employee Central Payroll, Zalaris PeopleHub, or other external providers, the goal is consistent data flow. Most organisations will also need to refine job architecture and comparator logic, as these are not provided natively.

In Compensation, standardising pay structures and guidelines ensures consistent decision-making. Embedding gender-neutral criteria in compensation and promotion cycles creates traceability. Auditing pay outcomes identifies and addresses anomalies. This creates confidence in how pay decisions are made and communicated.

People Analytics supports the measurement and monitoring of pay equity across the workforce. Dashboards and visualisations can be configured to analyse gender pay gaps by job, grade, or location, track progress on corrective actions, and support gender pay-gap reporting and ESG aligned workforce disclosures. By connecting HR and payroll data into a unified view, People Analytics turns compliance into insight.- driven transparency.

Governance and ongoing oversight are essential. Technology alone does not create compliance. Sustained transparency depends on strong governance: defining ownership, accountability, and validation processes for data, systems, and reporting. This includes assigning responsibility across HR, payroll, and legal teams, establishing workflows for data validation and approval, maintaining audit trails to evidence compliance, and supporting employee requests for pay-related information. Comparator logic, job-evaluation criteria and pay-structure governance are central to long-term readiness.

From compliance to ESG accountability

The configuration for directive compliance can potentially power elements of sustainability disclosures. Through ESG reporting capabilities, organisations can extend workforce- related pay-transparency data into the European Sustainability Reporting Standards. The directive establishes a framework for pay fairness. These same data points are directly referenced in ESG and CSRD reporting requirements, including ESRS S1 workforce standards covering employee characteristics, diversity metrics, collective bargaining coverage, training and skills development, and remuneration metrics.

By aligning pay-transparency data with these disclosures, organisations can use their existing SAP SuccessFactors environment to provide the HR data foundation required for workforce ESG reporting and demonstrate workforce accountability as part of a broader ESG strategy. This unified approach delivers a single auditable source of truth for workforce data, supporting both compliance and parts of ESG reporting. Investors, regulators, and employees expect organisations to disclose how they promote inclusion, pay equity, and development. By extending pay-transparency capabilities into ESG reporting, organisations can strengthen the credibility of sustainability filings, reduce duplication through shared data models, demonstrate social value and governance integrity, and turn regulatory compliance into a strategic advantage.

Implementation priorities for existing customers

The enforcement date is now just months away. For existing SAP SuccessFactors customers, readiness follows a three-phase approach. The first phase focuses on baseline and data integrity: conducting a cross-module readiness audit, validating job and pay-grade frameworks in Employee Central, mapping pay-component flows between HR, Compensation, and payroll, cleansing demographic and employment data for analytics accuracy, and establishing a compliance steering group spanning HR, reward, legal, and finance. For organisations that are not full-suite, this phase may also include assessing gaps in Recruiting, Compensation, or People Analytics activation needed to support native workflows.

The second phase activates and connects core capabilities: configuring Recruiting, Compensation, and HR Service Delivery to support directive workflows, deploying People Analytics dashboards for gender-pay reporting and management review, integrating local payrolls for consolidated data feeds, and testing cross-module reporting to ensure audit trails. This stage also includes configuring pay-transparency fields, updating templates, and ensuring comparator logic aligns to job architecture and directive requirements.

The third phase transforms compliance into an ongoing discipline: aligning annual reporting cycles to national thresholds, monitoring real-time alerts for pay-gap deviations, using communication tools to reinforce transparency messaging and training, evolving dashboards to include predictive pay-equity analytics, and maintaining configuration currency and data quality through support or managed services. Sustained governance is essential, including clear ownership for responding to employee information requests and validating recurring pay-gap calculations.

Why governance and adoption matter

Compliance cannot be delegated to technology alone. Effective pay transparency requires clear ownership across HR, finance, and legal, supported by data stewardship and continuous validation. Best-practice governance includes executive oversight where the CHRO or CFO acts as accountable sponsor, a compliance steering committee coordinating regulatory alignment and reporting schedules, a data governance team responsible for data quality and change control, and local country leads ensuring national transposition requirements are understood and executed. Organisations must also define responsibility for responding to employee information requests, validating annual pay-gap calculations, and documenting justification criteria for equal work and work of equal value.

Transparency is cultural before it is technical. Employees and managers must understand how pay decisions are made and what fairness looks like in practice. Using communication and learning tools within SAP SuccessFactors, organisations can deliver guided learning paths explaining pay philosophy and new transparency rules, provide manager enablement content to support equitable decision-making, and embed policy updates and feedback channels within the HR portal. Adoption is strengthened when reward, HR and line managers share a consistent understanding of pay governance, comparator logic and how to communicate transparency requirements effectively.

Starting with the essentials

Many organisations prefer to begin with core requirements before expanding capability. A foundational compliance enablement approach provides the essential SAP SuccessFactors configuration required for directive compliance, with the flexibility to add automation, scaling, advisory support, ESG-related reporting extensions as governance maturity and business requirements evolve. This delivers a faster path to compliance while allowing organisations to expand capability over time.

The baseline configuration includes position-to-requisition mapping, pay-transparency fields in recruiting workflows, amended job board mapping, offer approval workflows for offers outside pay range, and gender pay-gap Story reports in People Analytics. It also includes options for customer-specific adjustments depending on data structures and the local payroll landscape. Optional components include advisory services for compliance policy design and change enablement, automation through alerts and intelligent services for pay-gap remediation, AI-powered transparency features, and integrations for multi-country payroll and SuccessFactors extensions where customers are not full suite.

The foundation for compliance already exists in your system. What matters now is how effectively you activate, align, and in it.

Download our comprehensive playbook, Operationalising EU pay transparency in SAP SuccessFactors, to access detailed implementation guidance, configuration advice, and readiness frameworks for achieving compliance, confidence, and scalable governance across Europe.