How to define "work of equal value" for EU Pay Transparency Directive compliance

The EU Pay Transparency Directive is reshaping how European companies think about compensating their team members, in a myriad of ways.

But one question is particularly stopping People and Reward teams in their tracks: how do we actually define "work of equal value"?

The Directive is clear that you need to group employees into categories of workers performing ‘equal work or work of equal value’ – and then report your gender pay gap within those categories. 

What it doesn't tell you is how to determine which work is of equal value in the first place.

That gap between legal requirements and practical guidance is where many teams are getting stuck in their planning.

To help cut through the confusion, we sat down with Anita Lettink – author, speaker, and one of Europe's leading experts on pay transparency – to understand what the Directive actually requires and how to approach this in practice.

"Work of equal value" sits at the core of the EU Pay Transparency Directive

Equal pay for equal work or work of equal value is the entire purpose of the EU Pay Transparency Directive.

Article 157 of the Treaty on the Functioning of the European Union (the treaty that formed the original basis for EU law) already established equal pay as a legal requirement. 

What the EU Pay Transparency Directive does is introduce the transparency and legislation needed to actually enforce that principle – it exists “to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms”.

It achieves that through three core obligations on employers:

1. Objective ‘equal value’ pay structures (Article 4). Employers must take necessary measures to ensure pay structures enable the assessment of whether employees (both existing and new job candidates) doing equal work or work of equal value are in a comparable position for compensation – evaluated via objective, gender-neutral criteria such as skills, effort, responsibility, and working conditions.
2. Pay gap reporting by category (Article 9). Employers must report their gender pay gap broken down by category of workers performing work of equal value – not just as a single company-wide figure.
3. Employees' right to information (Article 7). Workers have the right to request their individual pay level and the average pay levels, broken down by male and female, for others in their category. 

Which means two concepts sit at the foundation of compliance to the Directive:

• Equal value work (Article 3(g)) is defined as “work determined to be of equal value based on objective, gender-neutral criteria” – with factors like skills, effort, responsibility, and working conditions specifically mentioned as examples.
• Category of workers (Article 3(h)) is defined as “workers performing the same work or work of equal value, grouped in a non-arbitrary manner based on those same objective, gender-neutral criteria”.

How to actually define your "equal value" employee categories – Anita Lettink's advice

The Directive tells us what those concepts mean. 

But what it doesn't tell us is how an employer should actually determine ‘equal value’ within their organisation – which factors to use to evaluate roles across functions and levels and group employees accordingly.

That's where many People and Reward teams are running into difficulty.

The particular sticking point is the need for cross-functional comparison. 

We saw this clearly in our recent Reward Hour webinar with Anita, where questions like "how do you compare senior leadership roles across Finance and HR?" and "can you justify paying IT roles more than marketing roles at the same grade based on labour market conditions?" came up repeatedly from our audience. 

The Directive is explicit that market rates or job content alone aren't sufficient justification for paying people differently – pay differences must be grounded in objective evaluation criteria. 

But most companies' existing job architectures and compensation frameworks weren't built for this new reality. 

Pay structures – salary bands, bonus eligibility, equity tiers, pay progression pathways – are typically organised around function, role, level, and (in some cases) location.

They help guide decisions on what a P4 software engineer should earn, and separately what a P4 HR business partner should earn – but they don't tell you how those two roles compare in value to the business, and therefore whether a pay gap between the two is justified.

Here's how Anita thinks about it.

Whatever method you use, it must be objective

"The Directive is not very restrictive," Anita says. “It doesn’t say anything about how you should determine ‘value’ – though some Member States might guide on this in their transpositions into national law. That’s genuinely up to you.”  

You can choose the factors you use to evaluate job value. You can weigh them differently depending on what's relevant to your organisation. You can decide to pay for geography, or not. You can still opt to benchmark technology roles at the 75th percentile because of labour market shortages. You can still pay for performance, seniority, or specialist expertise.

You just have to define how those things contribute to, or reflect the relative value of different roles. 

And whatever approach you take to evaluating value, it needs to be:

• Objective. The criteria you use to evaluate role value must be concrete and measurable – not "this role is important" but "this role requires advanced technical expertise, carries significant decision-making responsibility, and involves complex working conditions."
• Repeatable. The criteria used must be consistent across all roles and levels – the moment a factor applies to one group, it must apply across the board. So when employee A asks why they're paid what they're paid, and employee B asks the same question, the answer must carry the same components. "The factors, the sub-factors, the weighting of those factors — that all needs to be exactly the same," Anita says. 
• Defensible. The evaluation needs to be justifiable and explainable – to employees, to managers, and in court. "It needs to be a job evaluation that holds when you're explaining it to employees, that managers can explain, and that ultimately stands up in court." That matters because the burden of proof now sits with the employer – if an employee brings a pay discrimination claim and you haven't met your transparency obligations, it will be for you to prove there was no discrimination, not for them to prove there was.

Anita's recommendation: use the point factor job evaluation method

Anita's recommendation for how to achieve this is the point factor method. It isn’t the only valid approach – you can use whatever method you choose to evaluate value, as long as it’s objective, repeatable, and defensible. 

But it is a structured approach to job evaluation that has already been tested in pay discrimination court cases across Europe and consistently holds up.

"Fortunately, this has been done before," Anita says. "From that history, we know that certain methods do a great job. particularly point factor methods. They hold up in court because they're very explainable."

Here's how it works.

• You break down every job into the criteria you’ve determined to contribute to the value of a role – skills, effort, responsibility, working conditions, any other (objective) factors relevant to your organisation. 
• Each factor is then divided into sub-factors. For example, under skills you might have experience, education, and ability. 
• Then you assign a point value to each factor and sub-factor, weighted by how important that factor is relative to the others 
• Those factors, sub-factors, and weighting are then applied to every role to give a point score per role.

Because the same factors are applied for each role at every level, a Marketing Manager and a VP of Marketing will produce different point scores – the VP's greater scope of responsibility, decision-making, and complexity will naturally score higher when put through the same framework.

That's what makes cross-functional comparison especially meaningful: a Marketing Manager at P4 and an HR Manager at P4 might score similarly, identifying them as doing work of equal value, while a VP of Marketing would score higher and sit in a different category.

"A marketing analyst, an HR analyst, and an IT analyst probably couldn't pick up each other's roles tomorrow," Anita explains. "But when you break it down, the analytical capabilities they need to perform at that level might actually be more or less the same.”

“The point factor method lets you measure that – and it becomes a much better way to determine that, in fact, someone in IT and someone in marketing perform similar activities, have similar experience, similar education. So why is there such a wide range in payment?"

This is exactly what the EU Pay Transparency Directive is designed to surface. 

Historically, roles in male-dominated functions like IT have commanded a premium over roles in female-dominated functions like HR or marketing – not necessarily because the work is of greater value to the business, but because that's how the market has evolved due to inherent gender discrimination. 

Approaches like the point factor method cuts through that assumption, and the Directive gives employees the tools to act on what it finds.

In summary: Defining equal value work is the foundation – everything else follows

Everything in the EU Pay Transparency Directive flows from equal value work.

How your pay structures must be designed, how your gender pay gap gets reported, what employees have the right to ask – all of it depends on having a clear, objective methodology for determining which roles are of equal value and grouping employees accordingly. 

Without that foundation, you can't meet the obligations that sit on top of it.

That's why the natural place to start is job evaluation. 

Define your factors, your sub-factors, your weighting. Choose a methodology that's objective, repeatable, and defensible (whether that's point factor or another approach) and document the reasoning behind your groupings clearly. That methodology is what will need to hold up when employees ask questions, when managers need to explain decisions, and potentially when cases go to court.

Then start running the numbers sooner rather than later.

"Once you have this structure in place, start doing the pay gap analysis," Anita advises. "You need a little bit of experience – this is not something you've done before and know instinctively. If you run the reports now, you’ll better understand what you're looking at." 

Even with imperfect data, early analysis tells you where pay gaps exist amongst your newly defined categories of workers, which means you can start determining which can be explained by objective factors, and where action will be needed.

"Always keep this mantra in mind," Anita says. "Can I explain why we pay what we pay? As long as you can do that, a lot of your problems will disappear – or you'll see problems coming before they turn into compliance issues.”