EU Pay Transparency Directive: What now applies to job evaluation

With Directive (EU) 2023/970, the European legislator has transferred the principle of “equal pay for equal work or work of equal value” from a textbook sentence into an operational compliance framework.

For professionals who have been working with compensation and grading systems for years, this is significant news in two ways:

• What many experts have long considered methodologically correct is now an obligation across the Union.

• Many existing assessment systems will not meet the new requirements in this form: the toolbox published in March by the European Institute for Gender Equality further solidifies this view.

This results in two central questions for many organizations:

Comparison groups according to ETRL: Who needs to be compared with whom

The directive links four mechanisms into a closed loop: objective, gender-neutral evaluation criteria, ex-ante transparency for applicants and employees, binding pay reporting and a joint pay assessment if the reporting shows a wage gap of at least five percent in a category of employees that cannot be justified by objective, gender-neutral criteria and is not eliminated within six months.

This is exactly where the real leverage comes into play. An employee category or comparison group within the meaning of the directive is not the respective organizational department, but a group of employees who perform the same work or work of equal value.

Analytical job evaluation: Why the directive actually requires it

There are already indications in the directive itself and the context in which it was created that the European legislator had in mind analytical, criteria-based job evaluation as a means of determining equivalence. This is particularly evident when you check versions in other languages ​​in addition to the German version – which is helpful with EU directives. The key finding in this context: In Article 4(2), the Directive requires Member States to provide “analytical tools or methodologies” to support and guide the assessment and comparison of the value of the work against the criteria set out in paragraph 4.

In addition, there is Article 4 Paragraph 4, which describes the evaluation criteria: skills, responsibilities, workloads and working conditions, supplemented by “other factors relevant to the specific position”. This list is not exhaustive, but it is categorical. It implies a factor logic for evaluating the value of work. A pure ranking into salary bands that has developed historically falls through this grid.

The Pay Transparency Directive is based, among other things, on the case law of the European Court of Justice (ECJ) and analyzes of the weak effect of the previous Directive 2006/54/EC.

In the course of these analyses, the European Commission’s Staff Working Document 2013/512 is informative, as it states: “The analytical job evaluation methods, being systematic and complex, have the potential of being less discriminatory than non-analytical methods and they are therefore considered to be most appropriate for job evaluation in a gender equality context.”

Gender-neutral evaluation factors: What Article 4 specifically requires

The document in question also contains a list of gender-neutral evaluation factors. The EIGE toolkit, which was presented in March, also largely recommends analytical methods.

Anyone who still operates a traditional summary system must be aware of the risk of two-line descriptions without any factors, as can be found in numerous collective agreements today. Because global class schemas that do not require factorization come under pressure at the very moment when an employee representative asks: “Why is this position equivalent to that one, or why is it not?”

The gender-neutral formation of comparison groups based on the four criteria groups of the ETRL – necessary for the presentation of the gender pay gap for each comparison group in accordance with Article 9 paragraph 1 lit.

EIGE job assessment toolkit: three critical weaknesses

In March 2026, the European Institute for Gender Equality (EIGE) presented a “step-by-step toolkit” for gender-neutral job evaluation. This outlines a uniform technical language and specifies what the directive expects in terms of methodology.

There are three points that are particularly worth pointing out at this point, as these are examples of typical problems with job evaluation systems in general and the EIGE toolkit in particular.

The toolkit still considers the so-called paired comparison to be justifiable for certain size classes. However, from the perspective of many practitioners, this is a recommendation from the last century. Reason: The bureaucratic effort grows exponentially with the number of positions, the results are hardly documentable, have weak intersubjective security and are therefore difficult to defend successfully in a world of binding reporting obligations. The following aspects should also be taken into account:

Great scope for interpretation, which becomes a risk under the directive. Individual level values ​​for selecting the respective requirement level for each criterion use vague and indefinite wording. However, this is actually precisely a design flaw from the past that the directive aims to curb. We therefore advocate wordings that are based on observable characteristics – such as decision spaces, impact ranges or clear interfaces, not adjectives that mean something different in each functional family.

The danger of double assessments. This risk is most obvious with a classic male-favoring criterion, as both physical skills and physical stress can be assessed. Modern systems focus on physical stress because it is difficult to differentiate between physical stress and skills. This is particularly obvious in the EIGE system, as the physical skills criterion also constantly mentions stress.

This results in five operational recommendations for companies. These are to be understood as a guide and do not claim to be an advisory guide for all cases:

1. Clarify whether the existing evaluation system is analytical in the spirit of the directive. Summary, market matching without factor decomposition and pure banding models are not enough.
2. Mirror the factor logic against the criteria from Article 4 Paragraph 4. Anyone who does not clearly map competencies, responsibilities, pressures and working conditions has a gap.
3. Take factors such as sales or budget out of the job evaluation and move them into the compensation architecture. Tip: Identify and eliminate double weightings.
4. Revise the language of the assessment manual, with particular attention to level definitions and training materials for raters.
5. Prepare the data architecture so that employee categories can be formed, the five percent threshold can be calculated and, if necessary, a joint pay assessment can be carried out without any data effort.

Conclusion: Pay transparency as an opportunity for more modern compensation systems

Directive 2023/970 is not a bureaucratic extra weight, but a methodological request. This means: Anyone who takes equal pay seriously needs analytical job evaluation, gender-neutral language right down to the evaluation logic, a clear separation between requirement and performance dimensions and a data foundation that allows comparison of work of equal value.

The EIGE toolkit helps, but is questionable in some places, especially when comparing pairs, with indeterminate level values ​​and when dealing with physical requirements. Sales and budget belong in the remuneration, not in the evaluation.
We view the upcoming implementation cycle as an opportunity. Many existing evaluation systems have grown historically and carry the assumptions of a different working world. The directive forces you to take stock: whoever uses it will not only receive a compliance construct in the end, but also an evaluation system that is fairer, clearer and more modern.