This checklist covers the full scope of preparation required under EU Directive 2023/970. It is structured in four tracks: data, methodology, governance, and reporting. Most companies will need to work all four tracks in parallel.
Track 1: Data infrastructure
The seven Article 9 metrics require disaggregated pay data by gender, by pay component, and by comparable work category. Most companies do not have this data in a single place.
Confirm employee scope. Identify all workers covered by the Directive: permanent employees, part-time workers, fixed-term workers, workers on parental or sick leave, and executives with employment contracts. Interns and apprentices are included where they receive pay.
Map pay components. Inventory every pay element in your payroll system: base salary, target bonus, actual bonus paid, commissions, overtime, shift allowances, travel allowances, benefits in kind (company car, meal vouchers), and employer pension contributions. Each must be attributable at the individual level.
Verify gender data completeness. Confirm that gender is recorded for all in-scope employees. Identify any gaps and define a process for resolution in line with your data protection framework.
Establish a reference period. The Directive requires data to be drawn from a defined reference period (typically the calendar year). Confirm that your payroll system can extract a clean dataset for that period.
Define your data extraction process. Document which systems (HRIS, payroll, compensation management) contribute to the dataset, who owns each, and how the extract will be produced annually.
Complete a DPIA. If you are using external software for pay equity analysis, a Data Protection Impact Assessment is required under DSGVO. Document the tool's data residency, access controls, and processing scope.
Track 2: Methodology
Metric 7, the pay gap per category of comparable work, is the most consequential metric in the report. It is the number that determines whether Article 10 is triggered. It requires a documented, gender-neutral comparable work methodology.
Define your comparable work categories. Group all roles into categories based on four criteria: competencies, effort, responsibility, and working conditions. The grouping must be gender-neutral and documented. Job titles and grades alone are not sufficient.
Document your job evaluation methodology. Record how roles were assessed and why they were grouped as they were. This documentation must predate the results: it cannot be constructed after gaps are known.
Stress-test the groupings. Check whether any grouping systematically places women in lower-paying categories by design. If so, the grouping methodology is not gender-neutral and must be revised.
Define your pay definition. Confirm which pay components are included in each of the seven metrics. Align with the Directive's definition (everything received in exchange for work, in cash or in kind). Document any components that are excluded and the legal basis for exclusion.
Select your calculation methodology for Metric 7. The adjusted pay gap per comparable work group requires a statistical approach. Regression-based methods (such as Oaxaca-Blinder decomposition) are the most defensible. Document the method and the factors controlled for.
Run a pre-compliance audit. Before the formal reporting cycle, run the full calculation on your current data. This identifies which comparable work groups are likely to trigger the 5% threshold and gives you time to investigate causes and consider remediation before the results are public.
Track 3: Governance and Works Council
The Directive's cooperative requirements, particularly under Article 10, mean that compliance cannot be managed entirely within HR. Works Council involvement is required by law for companies where a Betriebsrat exists.
Identify the relevant Works Council(s). Confirm which Betriebsrat(e) have jurisdiction over the employees in scope. For multi-site companies, this may involve multiple Works Councils or a Gesamtbetriebsrat.
Notify the Works Council of the planned process. Under BetrVG §87, deployment of HR analytics tools requires Works Council co-determination. Initiate the consultation process before deploying any pay equity analysis software.
Agree on the comparable work group methodology with the Works Council. The job evaluation methodology and the resulting comparable work categories should be reviewed and agreed with the Works Council before the first report is produced. This removes the risk of a procedural dispute after gaps are disclosed.
Establish a process for Article 10. If any comparable work group shows a gap above 5% that cannot be justified, a joint pay assessment must be conducted in cooperation with the Works Council within six months of report submission. Define in advance who is responsible, what the process looks like, and what documentation is required.
Confirm board or management sign-off. The pay gap report is a public document. Senior leadership should be aware of the likely results before publication. Define the internal review and approval process.
Define the communication plan. Employees have a right to access the report. Plan how and when you will communicate the results internally, before or alongside external publication.
Track 4: Reporting and submission
Identify the national monitoring authority. Each member state must designate a competent body to receive pay gap reports. Germany has not yet defined this authority. Monitor the Referentenentwurf and subsequent law for confirmation.
Confirm the reporting format. The Directive requires digital submission in a standardised format. Germany will define the specific format in its transposition law. Build your data infrastructure to be format-agnostic until this is confirmed.
Publish the report on your website. In addition to submission to the monitoring authority, the report must be made publicly accessible, on the company website or in another publicly accessible location.
Make the report available to all employees. Inform employees that the report has been published and how they can access it.
Prepare for individual pay information requests (Article 7). Any employee may request their own pay level and the average for their comparable work group, broken down by gender. You must respond within two months. Confirm who handles these requests and that the underlying data is accessible at the individual level.
Set the annual reporting calendar. For companies reporting every year (250+ employees), the reporting process must be repeatable. Assign ownership, set internal deadlines for data extraction, methodology review, Works Council sign-off, and publication.
Summary timeline
| When | Action | Track |
|---|---|---|
| Now | Map pay components, confirm employee scope, begin DPIA | Data |
| Now | Define comparable work group methodology, document job evaluation approach | Methodology |
| Now | Notify Works Council, begin §87 BetrVG consultation | Governance |
| Q2 2026 | Run pre-compliance audit on current pay data | Methodology |
| Q2 2026 | Agree comparable work methodology with Works Council | Governance |
| 7 June 2026 | German transposition law must be in place (member state deadline) | Regulatory |
| Q3 2026 | Confirm reporting format and monitoring authority (post Referentenentwurf) | Reporting |
| Q4 2026 | Run full calculation for reporting year; internal review and management sign-off | Methodology / Governance |
| Q1 2027 | Works Council review of results; finalise report | Governance |
| By 7 June 2027 | Submit report to monitoring authority; publish on website; notify employees | Reporting |
| Within 6 months of submission | If any group exceeds 5% and is unjustified: initiate joint pay assessment with Works Council | Governance |
Axios Analytics automates Tracks 1 and 2, including data extraction, pay component mapping, comparable work group calculation, and all seven Article 9 metrics, and produces methodology documentation in a format designed for Works Council review. Built for the German mid-market.
See how it worksSources
- EU Pay Transparency Directive 2023/970, Official Journal of the European Union, May 2023
- KPMG Law: Implementation of the Pay Transparency Directive: what the expert commission recommends, December 2025
- Freshfields: Final report of the expert commission, December 2025
- Axios Analytics internal regulatory analysis, March 2026