Pay Equity AI Audit and Compliance Template

The EU Pay Transparency Directive (2023/970) requires employers to report gender pay information and comply with equal pay principles. AI salary-setting and compensation systems must be audited for gender and protected-characteristic bias. This template covers the audit and disclosure requirements.

Quick Answer

AI-driven pay decisions must be audited for bias against protected characteristics. The EU Pay Transparency Directive creates reporting obligations for employers of 100+ from 2026 and reverses the burden of proof in pay discrimination claims. UK employers with 250+ must publish annual Gender Pay Gap Reports. Compensation data analytics require a DPIA.

Compliance Checklist (8 items)

Conduct a pay equity analysis across all roles — identify statistically significant pay gaps by gender, race, disability, and other protected characteristics
If AI or algorithmic tools are used to set pay ranges or bonuses, audit the model for differential outputs across protected groups
For EU employers with ≥100 employees: comply with EU Pay Transparency Directive reporting requirements from 2026 (100-249 staff) / 2027 (250+ staff)
For UK employers with ≥250 employees: publish statutory Gender Pay Gap Report annually by 4 April (private) or 30 March (public)
Implement a job evaluation scheme to assess work of equal value — required for equal pay defence
Give employees the right to request information about pay levels for comparator roles — mandatory under the Pay Transparency Directive
Store pay equity audit results and actions taken for five years — documentation of remediation is critical for defending equal pay claims
Apply GDPR to compensation data analytics — salary data is personal data; DPIA required for large-scale pay profiling

Penalty if not compliant

EU Pay Transparency Directive: national enforcement bodies can impose fines and the burden of proof shifts to the employer in equal pay disputes. UK Gender Pay Gap failures: Equality and Human Rights Commission enforcement and unlimited Employment Tribunal equal pay awards.

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