Before the first report, salary data is still hidden in free text and mixed formats. Here are the 5 contract and HR data changes employers should make before June 7, 2026.
It is the last stretch before June 7, 2026, and many employers are still keeping salary data in free text and inconsistent formats. One employment contract says “salary 1,800 euros per month gross,” another says “base pay 1,750 + monthly bonus up to 100,” and a third says “salary to be agreed in Annex 1,” which then never gets properly connected to the rest of the file. Human readers can follow all three. Reporting systems cannot.
That is why this work should be done now. Directive (EU) 2023/970 must be transposed by June 7, 2026; the official text is available on EUR-Lex. The first pay-gap report for employers with 250+ workers is due on June 7, 2027. The year between those two dates is exactly the time you have to clean up the contract template and HR data model.
What the directive actually changes
The directive has a simple goal: pay should be set according to objective, gender-neutral criteria, workers should understand how pay is determined, and employers should be able to compare pay components between women and men doing the same or equivalent work.
In practice, the obligations fall into two groups: those that apply to all employers and those that depend on company size.
Rules for all employers
These rules apply even if you have ten employees.
- Starting salary range for candidates. Before the interview, every candidate must receive written information about the starting salary or salary range for the role. (Article 5; see EUR-Lex Article 5)
- Ban on asking for previous salary. Employers may not ask candidates what they earned before. Previous salary cannot be used as the basis for a new offer.
- Gender-neutral job ads. The wording of the vacancy must not steer toward one gender.
- Pay progression criteria for workers. Workers must be able to access the criteria used to decide pay, pay levels and pay progression.
- Worker right to information. Any worker may request written information about their pay level and the average pay level of men and women in their category. The response deadline is two months. (Article 7)
Rules that depend on headcount
Reporting obligations are size-based.
| Headcount | First report | After that |
|---|---|---|
| 250+ | 7 June 2027 | every year |
| 150–249 | 7 June 2027 | every 3 years |
| 100–149 | 7 June 2031 | every 3 years |
| Under 100 | no annual reporting duty | — |
The report must include the overall gender pay gap, the median gap, the gap in variable pay, and the gap by worker category. It is submitted to the competent authority and becomes available to workers.
If the pay gap exceeds 5%
If, in a specific worker category doing equal or equivalent work, the average pay gap between men and women exceeds 5%, and the employer cannot justify it with objective criteria or reduce the gap within six months, the employer must carry out a joint pay assessment with worker representatives. (Article 10)
The key point is that the threshold applies per category. A company-wide average of 2% does not help if one category is at 5.1%.
The practical state of play in Estonia
Estonia's government asked in April 2026 to delay the directive by two years, and officials have said they are prepared to pay EU fines if the directive is not transposed on time. The arguments focus on administrative burden and the idea that wages should remain a matter for the free market.
Practically, that means three things:
- The EU deadline has not changed. The Commission has confirmed that June 7, 2026 remains the target date. A postponement request is not the same thing as an official delay.
- Cross-border employers still need to prepare. If you are part of an EU group or you have operations in Latvia, Finland or Germany, the rules already affect your contracts through those markets.
- A pay mirror already exists. Statistics Estonia and the Ministry of Economic Affairs and Communications have built Palgapeegel, a data-driven pay-gap analysis tool that employers can use right now, even before reporting becomes mandatory.
A sensible employer does not depend on whether national law arrives in June, September or next year. Cleaning up the contract template and HR data is the right move either way. ERR also covered the political background and the delay request here.
The five-point audit to complete before June
These five changes are operational, not legal theory. They make your employment contract template and HR database comparable so that the 2027 report does not become a data-cleaning project.
1. Put base pay in a structured field
Old habit: “Salary is 1,800 euros per month” buried in a paragraph inside section 3 of the contract.
New norm: the template should contain a separate field for gross monthly salary = 1,800 €, stored as structured data, not plain text. The same field can then be used in reporting without manually parsing wording.
If your current Word template keeps salary in normal prose, the first step is to turn that line into a clear field. How to create Word templates in Agrello explains the mechanics.
2. Keep variable pay in a separate field
Bonus, performance pay, monthly incentive pay, sales commission — all of these should be separate fields, not hidden in wording like “plus as set out in internal policy.” From a reporting standpoint, base pay and variable pay should be distinct. If variable pay is buried in an annex or policy document, someone must manually reconstruct it later.
If the variable pay method points to a separate policy document, the contract can refer to it — but the amount or percentage range should still remain structured.
3. Add job level or group
The directive is built around the idea of equal or equivalent work. A job title like “specialist” is not enough on its own — you need a job level or internal group, such as “Software Engineer, level 3” or “HR Specialist, group B.”
If you do not yet have a formal leveling system, start simple. Even three levels — junior, mid, senior — are better than none. Consistency matters more than perfection.
4. Make working time and workplace explicit
Working time (full-time / 0.8 / 0.5) and workplace (office / hybrid / remote) affect pay comparability. Two specialists with the same salary, one full-time and one at 0.75 FTE, are not in the same category. If these fields are clear in the contract, the reporting categories are clear too. If not, you get unnecessary noise.
5. Keep version control and the signing audit trail
Every contract needs a trace: when it was signed, which version was used, and who signed it. That matters especially for salary changes. If a pay rise is confirmed only in an email — “I confirm 2,200 from July” — that is not enough for audit purposes.
The audit trail is part of the signing platform. Smart-ID, Mobiil-ID and ID-card give you a legally equivalent digital signature in the Baltics, and the audit trail is created automatically. See also “Orderly documents and provable signatures”.
Fix the HR data model in three steps
The contract template is only half the work. The other half is the HR database — Excel, HRIS or payroll software — from which the report is eventually generated.
1. Standardize the fields for the same role. If ten software engineers have salaries recorded in ten different formats, even the best template will not save you. The old archive will still need cleanup. The practical question is where to start: clean the archive or apply the new system only to future contracts? The sensible answer is to start with new contracts and clean the archive category by category, beginning with the most important roles.
2. Separate pay components in the HR system. Base pay, variable pay, category/group and working time should be separate fields. If your payroll software currently has just one “salary” column, those data will need to be split before reporting anyway. Do it early.
3. Connect contract fields to the payroll system. If the contract is created in Agrello with structured fields and the payroll system reads those same fields, there is no manual re-entry step where copy-paste errors creep in.
What to change in recruitment right now
The recruitment rules in Articles 5 and 6 apply to all employers, regardless of size and regardless of when national law is updated. For employers operating across the EU, they are relevant immediately anyway. Three changes to make now:
- Add the starting salary range to the job ad. Not “competitive,” but “€2,200–€2,800 gross per month.” The range should be realistic; it sets the tone for the later salary discussion.
- Remove the “previous salary” question from your application form. If the field exists, delete it. Previous salary cannot be the basis of a new offer.
- Review the wording of the job ad. Use gender-neutral language. Phrases like “looking for a man for the team” are a problem.
These changes belong in the recruitment process before June 7, not in January 2027. Candidates can already complain if they were not given a salary range, and the directive's candidate rights can matter in disputes even before national legislation is fully in place.
How Agrello helps
Agrello templates are built around structured fields, not free text. If you turn your Word employment contract into a template, mark salary, job level, working time and variable pay as separate fields, and connect the template to an Excel or CSV file where each row is one employee, the result is straightforward:
- All contracts for the same role use the same salary structure, so reporting does not create artificial noise.
- Salary changes are also handled through templates, and the audit trail is created automatically.
- All signatures are captured through Smart-ID, Mobiil-ID or ID-card, which meets the legal standard for employment contracts in Estonia.
- At reporting time, the data can be exported as CSV instead of being parsed from free text.
The same workflow described in the onboarding article — template + Excel data + audit trail — is exactly what makes pay-transparency reporting technically manageable. Once it is set up once, it keeps working for every new hire and every future salary change.
What to do this week
If you are reading this at the end of April or in May 2026, you have roughly six weeks left before June 7. Here is the checklist:
- Review the current employment contract template. Is salary stored as structured data or only as text?
- Add a separate variable-pay field to the template. Even if most employees do not have variable pay, the field can stay empty.
- Add job level or group to the template. Three levels — junior / mid / senior — are better than none.
- Review the last six months of job ads. Did they include a salary range? If not, add one immediately to the next roles.
- Remove the “previous salary” question from the application form.
- Review the payroll system structure. Are base pay and variable pay separate?
- Decide how to handle the legacy archive. Clean it step by step, or start with templates for new contracts.
The list is not long. But every item you postpone to January 2027 becomes much more expensive than the same decision in May 2026.
FAQ
When do employers have to transpose Directive (EU) 2023/970?
The transposition deadline for Member States is June 7, 2026. That is the official EU date, and cross-border employers should prepare for it even if local implementation is delayed.
What should I change in my employment contract template for pay transparency?
Salary information should be structured, not buried in free text: base pay as a separate field, variable pay as a separate field, job level or group as a separate field, and working time clearly defined. That keeps contracts for the same role comparable and makes reporting much easier later.
Can employers ask candidates about their previous salary?
No. The directive's candidate rules prohibit asking for a candidate's previous pay, and candidates must be informed of the starting salary range before the interview.
Why is the 5% pay gap threshold important?
If the pay gap between men and women in a specific worker category exceeds 5% and cannot be justified with objective, gender-neutral criteria, the employer may need to carry out a joint pay assessment with worker representatives.
Start with the template, not the report
The point of the Pay Transparency Directive is not that you should somehow explain away every pay gap in 2027. The point is that you should have a clean picture of what is actually happening in your organization — and that workers, candidates and worker representatives should be able to understand it too.
If the contract template is structured, HR data is separated and the audit trail exists, the report is not a threat. It is just a report. A free-text archive of “agreed separately” clauses is the real threat.
If you are already thinking about how to rebuild your contract templates with a better structure, it is worth starting with a broader template portfolio view — that is covered in “Getting started with contract automation: build a template portfolio first”. Pay transparency is one reason to do the work, but not the only one.
If you want to prepare the contract template right away, create a free Agrello account and start from your current Word employment contract. Mark the variable fields, save it as a template, test it with one sample employee. That hour of work gives you a template that is ready for June 7 — and that keeps working for every future hire.
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