A New Reporting Obligation
Directive 2023/970 introduces an unprecedented requirement to report on pay. Companies will have to regularly publish data on the pay gap between women and men.
Who Does the Obligation Apply To?
Implementation Timeline
| Company Size | First Report Deadline | Frequency |
|---|---|---|
| 250+ employees | June 7, 2027 | Annually |
| 150-249 employees | June 7, 2027 | Every 3 years |
| 100-149 employees | June 7, 2031 | Every 3 years |
Note: Companies with fewer than 100 employees are not required to report, but the directive encourages member states to extend the requirements.
What Must the Report Include?
Mandatory Elements
- Pay gap – difference in average pay between women and men (%)
- Median pay gap – difference in pay medians (%)
- Gap in complementary components – bonuses, allowances, benefits (%)
- Median gap in complementary components (%)
- Proportion of workers receiving complementary components (F/M)
- Proportion in quartiles – percentage of women and men in each pay quartile
How to Calculate the Pay Gap?
Pay gap (%) = (Average pay M - Average pay F) / Average pay M × 100Example:
- Average male salary: €5,000
- Average female salary: €4,250
- Pay gap: (5,000 - 4,250) / 5,000 × 100 = 15%
Where to Publish the Report?
The report must be:
- Provided to employees and their representatives
- Submitted to the monitoring body (in Poland likely PIP or GUS)
- Publicly available – e.g., on the company website
What Happens When the Gap Exceeds 5%?
If the report shows a pay gap above 5% in any category of workers, and the employer cannot justify it with objective factors:
- Mandatory joint pay assessment with employee representatives
- Analysis of causes of pay differences
- Remedial plan – corrective measures and timeline
- Monitoring of progress in closing the gap
How to Prepare for Reporting?
Step 1: Data Audit
- Identify sources of pay data
- Check data completeness and quality
- Establish definitions (what constitutes “pay”?)
Step 2: Job Categorization
- Group employees by category
- Define “work of equal value”
- Apply objective valuation criteria
Step 3: Calculations
- Calculate all required indicators
- Analyze data by category
- Identify areas with gap > 5%
Step 4: Cause Analysis
- Why do differences exist?
- Are there objective justifications?
- What corrective actions to take?
Step 5: Report and Communication
- Prepare report in required format
- Consult with employee representatives
- Publish and submit to monitoring body
Reporting Tools
HR/Payroll Systems
Most modern HR systems (SAP SuccessFactors, Workday, local systems) will require updates with pay gap reporting modules.
Spreadsheets
For smaller companies, Excel reporting is possible but requires:
- Data standardization
- Calculation formulas
- Result validation
Dedicated Solutions
Specialized pay gap analysis and reporting tools are appearing on the market (e.g., Syndio, PayScale, Gapsquare).
Consequences of Non-Compliance
- Financial penalties – effective, proportionate, and dissuasive
- Employee claims – full compensation for discrimination
- Reputation – negative PR and recruitment difficulties
- Audits – increased oversight by authorities
Summary
Pay gap reporting is not just a legal obligation but also a diagnostic tool. Regular data analysis allows identifying and eliminating inequalities before they become serious legal and reputational problems.
In the next article: “Transposition of the Directive by June 2026 – What Must Poland Do?”
Read Also
- Gender Pay Equality – Why Does the Pay Gap Still Exist?
- Pay Audit When Gap Exceeds 5% – How to Conduct a Joint Assessment?
Read also
- Gender Pay Equality – Why Does the Pay Gap Still Exist?
- Pay Audit When Gap Exceeds 5% – How to Conduct a Joint Assessment?
- A Deeper Look at the Pay Gap: Extended Analysis of Hidden Causes of Pay Inequality
Develop your skills
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Frequently Asked Questions
When do pay gap reporting obligations take effect for companies with 100-149 employees?
Companies with 100 to 149 employees must submit their first pay gap report by June 7, 2031, and then report every three years thereafter. Larger companies face earlier deadlines, with those employing 150 or more workers required to report by June 7, 2027.
What data must be included in a pay gap report?
The report must include six key metrics: the average pay gap between women and men, the median pay gap, the gap in complementary components such as bonuses and benefits, the median gap in those components, the proportion of workers receiving complementary components by gender, and the percentage of women and men in each pay quartile.
What happens if a company fails to submit its pay gap report on time?
Non-compliance can result in financial penalties that member states are required to make effective, proportionate, and dissuasive. Beyond fines, companies risk increased regulatory scrutiny, employee discrimination claims, and reputational damage that can affect talent acquisition and retention.
Can smaller companies voluntarily report on the pay gap?
Yes, the directive encourages member states to extend reporting requirements or at least make them available to companies with fewer than 100 employees. Voluntary reporting demonstrates a commitment to pay equity and can strengthen employer branding and employee trust.