05 Aug EU Pay Transparency Directive: Why Data Ownership Matters for Compliance
Key Takeaways
- The transposition deadline for the EU Pay Transparency Directive (Directive (EU) 2023/970) passed on June 7, 2026, but only 4 of 27 EU countries fully implemented the rules on time (Ogletree Deakins, 2026).
- The Netherlands, Sweden, Czechia, and Denmark officially confirmed their implementation will be delayed until January 1, 2027 (DCI Consulting, 2026).
- The first mandatory gender pay gap reports are due in 2027 for employers with 150+ employees (annually for 250+, every three years for 150-249), and by 2031 for employers with 100-149 employees.
- MintHCM stores compensation data (gross, net, employer cost) in the Terms of Employment module, linked to both the employee’s position and contract, and its built-in Reports mechanism lets users assemble this data into a custom report.
- Open source HCM makes it possible to verify how pay data is stored and processed, instead of relying on a vendor’s word.
Introduction
The EU Pay Transparency Directive (Regulation (EU) 2023/970) requires companies across the European Union to report gender pay gaps and give employees access to information about how pay is determined. The transposition deadline passed on June 7, 2026, but most EU countries have not fully implemented the rules. That does not mean the topic is losing relevance – the first mandatory reports are due as early as 2027.
What is the EU Pay Transparency Directive and who does it apply to?
The EU Pay Transparency Directive (Directive (EU) 2023/970) is an EU regulation from 2023 that sets minimum standards for pay transparency and requires employers to report gender pay gaps. The directive entered into force on June 6, 2023, and member states had until June 7, 2026 to transpose its provisions into national law. Obligations apply to employers of different sizes, with the strictest requirement – annual reporting – falling on companies with 250 or more employees.
What is the implementation status of the directive across EU countries?
Only 4 of 27 EU countries – Italy, Slovakia, Lithuania, and Malta – fully implemented the directive before the June 7, 2026 deadline (Ogletree Deakins, 2026). The Netherlands, Sweden, Czechia, and Denmark have officially confirmed their implementation will be completed by January 1, 2027 (DCI Consulting, 2026). The remaining countries, including Poland, have implemented the rules partially or have legislation still moving through the process – Poland’s current law covers only recruitment-related obligations, with full transposition still pending. This divergence across countries does not exempt companies from preparing for reporting.
When do companies have to report gender pay gaps?
Companies with 250 or more employees must file their first mandatory gender pay gap report by June 7, 2027, and then report annually (Article 9, Directive (EU) 2023/970). Companies with 150-249 employees face the same first deadline, but report every three years afterward rather than annually. Companies with 100-149 employees get more time – their first report is due by June 7, 2031. Companies with fewer than 100 employees can report voluntarily, though individual EU countries may choose to make this mandatory for them as well.
Why does data ownership matter for compliance?
Data ownership matters because gender pay gap reporting requires extracting and analyzing compensation data linked to positions and employment history – which is difficult without full control over how that data is structured. This argument mirrors the auditability case made for HR systems under the AI Act: a closed system asks you to take the vendor’s word for it, while open code lets you verify directly how data is stored and processed.
How does open source HCM support reporting readiness?
Open source HCM like MintHCM supports reporting readiness through a transparent compensation data structure and a built-in Reports mechanism, available without vendor involvement. Compensation data – gross pay, net pay, and employer cost – is stored in the Terms of Employment module, linked to both a specific position and the employee’s contract. The Reports mechanism lets users assemble a custom report from these fields, filterable by user or date – though MintHCM does not have a ready-made, predefined gender pay gap report. A similar data-ownership argument comes up around MCP: Claude connected to MintHCM through MCP acts within the permissions of the logged-in user, not outside the system.
Table: EU directive implementation status by country group (August 2026)
| Country group | Status | Countries (examples) |
|---|---|---|
| Fully implemented on time | 100% implemented by June 7, 2026 | Italy, Slovakia, Lithuania, Malta |
| Confirmed delay | Officially reported delay, deadline: January 1, 2027 | Netherlands, Sweden, Czechia, Denmark |
| Partial implementation / in progress | Some provisions in force, full transposition still in the legislative process | Poland and most other EU countries |
(Source: Ogletree Deakins, DCI Consulting, 2026. Country-level implementation status is based on legal analyses from June 2026 and may change as legislative processes progress.)
Frequently Asked Questions
Does the EU Pay Transparency Directive only apply to large companies?
No. Obligations apply to employers of different sizes, but the strictest annual reporting requirement applies to companies with 250 or more employees. Companies with 100-149 employees have until 2031, and companies under 100 employees report voluntarily.
Does the June 7, 2026 deadline mean the rules are now in force across the EU?
No. Only 4 of 27 EU countries fully implemented the directive on time. Most countries are still working through the legislative process or have implemented the rules only partially.
When do companies have to file their first gender pay gap report?
It depends on company size. Companies with 250+ and 150-249 employees file their first report by June 7, 2027 – the difference is in how often they report afterward (annually vs. every three years). Companies with 100-149 employees have until June 7, 2031.
Does MintHCM have a gender pay gap reporting feature?
There is no ready-made, predefined report of this kind. MintHCM does have a standard Reports mechanism, available in the product, that lets users configure a custom report from fields such as gross pay, net pay, or employer cost, linked to position and employee records.
How is this different from salary range matching for candidates?
It’s a separate topic. Matching a candidate to a position’s budget is part of the recruitment process, while gender pay gap reporting is a compliance obligation concerning current employees and historical compensation data.
Does open source HCM have an advantage over closed-source software when it comes to this directive?
Yes, in a structural sense – access to the code and the data lets you verify directly how compensation information is stored and processed, instead of relying on vendor assurances.
Sources
Directive (EU) 2023/970. Official Journal of the EU, 2023.
European Commission Confirms the EU Pay Transparency Directive Implementation Deadline Remains 7 June 2026. Ogletree Deakins, 2026.
The Transposition Deadline Has Passed. DCI Consulting, 2026.