EU Gender Pay Gap Reporting 2025: Directive Compliance and Best Practices

EU Gender Pay Gap Reporting 2025: Compliance Guide

The EU Pay Transparency Directive requires employers with 100+ employees to publish gender pay gap reports from 2026 (250+ from 2024). Prepare your 2025 data collection, analysis methodologies, and action plans now to meet deadlines, avoid penalties (up to 5% payroll), and demonstrate equal pay commitment.

Reporting Requirements

  • Annual Reporting: Median and mean gender pay gaps by job category, level, and seniority.
  • Bonus Gap Analysis: Variable pay, stock options, performance bonuses by gender.
  • Proportions: Male/female representation in each quartile of pay distribution.
  • Pay Justification: Explain gaps exceeding 5%; provide remedial action plans within 6 months.
  • Publication: Share with national authority and employees; public disclosure for 250+ staff companies.

Data Collection Methodology

  1. Snapshot Date: Use single reference date (e.g., 31 December 2025) for all calculations.
  2. Hourly Pay: Calculate full-time equivalent hourly rate (gross salary / contractual hours × 12 / 52).
  3. Inclusions: Base salary, allowances, shift premiums, regular bonuses prorated.
  4. Exclusions: Overtime, one-off payments, reimbursements, benefits-in-kind.
  5. Segmentation: Analyze by department, job family, grade, tenure, contract type (full/part-time).

Gap Calculation Formula

Median Gender Pay Gap: (Median Male Hourly Pay - Median Female Hourly Pay) / Median Male Hourly Pay × 100

Example: Male median €25/hour, Female median €22/hour → Gap = (€25 - €22) / €25 × 100 = 12%

Action Plan Framework

If gap exceeds 5%, develop and publish remedial action plan within 6 months:

  • Root Cause Analysis: Identify drivers (occupational segregation, part-time work, seniority imbalances, pay negotiation differences).
  • Corrective Measures: Pay audits, transparent salary bands, objective promotion criteria, flexible work policies.
  • Targets: Set quantitative goals (e.g., reduce gap to <3% within 3 years).
  • Timelines: Assign responsible parties, milestones, reporting schedules.
  • Monitoring: Quarterly reviews, progress reports to works councils and employees.

Best Practices for Compliance

  • Salary Transparency: Publish salary bands in job postings; prohibit salary history questions in interviews.
  • Pay Equity Audits: Annually review pay decisions, adjust anomalies proactively.
  • Objective Criteria: Base promotions, bonuses on measurable performance, not negotiation or tenure alone.
  • Training: Educate managers on unconscious bias, equitable pay practices, legal obligations.
  • Employee Rights: Inform staff of right to request pay information, challenge discrepancies without retaliation.

Next Steps: Audit your 2025 payroll data, calculate gender pay gaps using our template, and draft an action plan. Engage works councils, HR, and legal teams to ensure full directive compliance by 2026 reporting deadlines.

← Back to Blog