It’s no secret that organizations with fair and transparent pay practices earn greater employee trust and a stronger brand reputation. According to the latest Mercer Global Pay Transparency Report, when prospective candidates and current employees have clear visibility into how compensation decisions are made, organizations typically see increased engagement, enhanced productivity, and improved talent attraction and retention.
To date, many employers have approached pay equity at their own pace, but a new era is beginning, one that will redefine pay practices and workplace culture for organizations across the European Union (EU). Set to take effect across EU Member States in 2026, the EU Pay Transparency Directive (EU Directive 2023/970) strengthens the principle of “equal pay for equal work or work of equal value” as enshrined in EU law, requiring employers to adopt transparent pay practices and close gender pay gaps or face potential legal and financial consequences.
SAP SuccessFactors HCM can provide a single source of truth for the critical data-driven insights needed to help organizations meet EU pay transparency requirements. Today, SAP is announcing new capabilities that can make it even easier for organizations to meet their requirements across EU countries.
Launching in 1H 2026, EU Pay Transparency Insights is a new capability within the People Intelligence package in SAP Business Data Cloud (SAP BDC), an intelligent, AI-powered application that can deliver ready-to-use, actionable insights to help leaders make more informed decisions. EU Pay Transparency Insights enables organizations to analyze compensation, identify outliers, and address pay gaps, helping them meet reporting requirements while unlocking the workforce and business performance benefits of achieving true pay equity.
Three requirements every employer must meet—and how SAP SuccessFactors HCM supports them
The EU Pay Transparency Directive represents one of the most sweeping changes to workplace compensation in decades. To meet its requirements, organizations will need to reassess their current HR data management capabilities and processes and begin planning now. As countries move toward putting the directive into law by June 2026, some obligations may already apply, with others set to take effect as soon as national laws are enacted. And because pay gap reporting deadlines vary by organization size—starting in 2027 for employers with 150 or more employees and based on 2026 workforce data—organizations must act now to be ready.
SAP SuccessFactors HCM is uniquely positioned to support organizations in addressing the three key requirements outlined in the directive—gender pay gap reporting, employee pay transparency, and candidate pay transparency—with several capabilities already available today and advanced analytics for gender pay gap reporting delivered through EU Pay Transparency Insights in 1H 2026.
1. Gender pay gap reporting
Once national laws are in place, employers will be required to disclose their gender pay gaps on a predefined schedule, and any gap of 5% or more must be explained or mitigated with a joint pay assessment. With EU Pay Transparency Insights within People Intelligence in SAP BDC, organizations will be able to access rich workforce insights to analyze compensation and identify drivers behind pay gaps, giving them the information they need to generate actionable reports with a complete view of workforce equity in a single place.
2. Employee pay transparency
In accordance with the directive, employees have the right to request information on average pay levels by gender for comparable roles. By leveraging the powerful document generation capabilities in SAP SuccessFactors HCM, employers can provide employees with a self-service experience to display individual pay transparency statements directly from the People Profile in SAP SuccessFactors Employee Central. These statements can give clear insight into the employee’s annual pay and the average pay of the same worker category broken down by gender.
3. Candidate pay transparency
Employers will be required to disclose pay ranges in job advertisements or before interviews. They will also be prohibited from asking applicants about salary history. SAP SuccessFactors solutions help enhance pay transparency by enabling employers to display pay ranges directly within job postings published through SAP’s recruiting solutions, including SAP SuccessFactors Recruiting and SmartRecruiters.
In addition to these SAP SuccessFactors capabilities, SAP continues to work with our vast partner ecosystem to support pay parity and pay transparency efforts.
An opportunity to lead with accountability
The EU Pay Transparency Directive sets a new baseline for accountability in how organizations manage and disclose pay. By preparing early and partnering with SAP, organizations can deliver transparent compensation insights, empowering employees with a clear view of their total rewards and career journey and supporting HR professionals in making consistent and measurable decisions with confidence. With continuous innovation and trusted localized expertise, SAP helps organizations stay on top of changes and build a sustainable, employee-centered approach to pay equity across the EU.
Learn more about how SAP SuccessFactors HCM can help your organization stay compliant with the EU Pay Transparency Directive in the “Ready on Day One: Confidently Navigate the EU Pay Transparency Directive” webinar.
Dan Beck is general manager and chief product officer for SAP SuccessFactors.
