By Don Lustenberger
BLOG OVERVIEW: The European Institute for Gender Equality (EIGE) has released an updated EU-wide toolkit on gender-neutral job evaluation and classification designed to help employers establish the pay structures required under Article 4 of the EU Pay Transparency Directive (Directive 2023/970). This DCI analysis explains what the toolkit offers, where it excels—including its treatment of undervalued job demands, gender bias awareness, variable pay, and scaled approaches for employers of all sizes—and where it falls short for complex, multinational organizations. Key gaps include an advocacy-leaning framing rather than a strictly gender-neutral methodology, missing compensable factors like scope of organizational impact, limited guidance on reconciling equal-value pay with external labor markets, and no acknowledgment of the scale of work involved in evaluating every job in an organization. Employers preparing for 2027 reporting obligations and joint pay assessment requirements should treat the EIGE toolkit as a credible starting point, not a complete compliance program.
The European Institute for Gender Equality (EIGE), an agency of the European Union (EU), recently published its EU-Wide Guidelines on Gender-Neutral Job Evaluation and Classification, an update to the European Commission’s 2013 version of those materials. This step-by-step toolkit provides guidance on establishing gender-neutral pay structures prescribed by Article 4 of the European Union Pay Transparency Directive (the Directive). While employers lacking formal pay structures can clearly benefit from the toolkit, employers with existing, well-developed pay structures may find the toolkit illuminating in ways they do not expect—and may still need to take certain steps to ensure they are compliant with the Directive. The toolkit comes as employers anxiously await EU member states’ transposition of the Directive into binding law and guidance on implementation. In this piece, we will look closely at the toolkit and highlight the following:
- What the toolkit offers and how it ties to requirements under the Directive
- What the toolkit does well
- What else employers need to consider as they prepare to comply with the Directive
The toolkit is a credible, practical resource for employers beginning to evaluate and classify jobs in accordance with the Directive and establish gender-neutral pay structures. Employers with existing job evaluation systems and pay structures will also find the toolkit instructive, particularly in understanding where common practices like market-based pay adjustments may create the very disparities the Directive aims to eliminate. However, the toolkit has meaningful gaps—particularly for large, multinational employers—and should be treated as a starting point, not a complete compliance program.
Job Evaluation and the Directive
The EIGE toolkit instructs employers on how to conduct job evaluation—the foundation for defining work of equal value under the Directive.
Under the Directive, beginning in 2027, covered employers will be required to report gender pay gaps, including those for worker categories reflecting those performing same work and those performing work of equal value. Employers reporting worker categories with pay gaps of 5% or more are required to take follow-up steps, which can involve justifying pay differences or remediating them.
Job evaluation refers to the process of analyzing jobs to determine their relative value. At a high level, the process can involve rating or comparing jobs according to various criteria, or compensable factors, deemed relevant by the employer. Jobs may be scored or ranked based on those compensable factors and then arranged into a job structure, which may serve as the basis for an organization’s pay levels or compensation grades.
The Directive prescribes four classes of objective, gender-neutral compensable factors—skills, effort, responsibility, and working conditions (with allowance, where appropriate, for other factors that may be specific to a particular job)—which employers must use to evaluate jobs. The Directive also requires employers to have in place structures that enable comparisons of pay among those performing work of equal value. Job evaluation offers the most obvious means for developing such pay structures.
In turn, the EIGE toolkit provides step-by-step instructions for conducting job evaluation leveraging those very factors, along with guidance to help ensure the process itself and evaluation criteria both remain gender neutral. The toolkit can help employers create worker categories based on work of equal value needed for reporting purposes under the Directive. It also devotes several pages to translating job evaluation results into an operational gender-neutral pay structure with multiple levels and pay ranges.
Toolkit Strengths
The EIGE job evaluation toolkit excels in promoting frequently undervalued job demands, cautioning against common sources of gender bias, addressing complementary and variable pay, and providing scaled approaches for employers of different sizes.
Consideration of Overlooked Job Demands
The Directive seeks to address undervalued features of jobs common among female-dominated work, emphasizing that “relevant soft skills must not be undervalued” (Article 4[4]) in employer pay structures. Accordingly, the EIGE toolkit emphasizes the relevance and value of interpersonal skills, planning skills, and emotionally demanding tasks—job features that traditionally may not have been valued as highly as technical skills or physically demanding tasks. This emphasis is woven into the toolkit’s how-to guides, checklists, and examples to ensure that employers give these job features due attention in the job evaluation process. This can be an important step for employers conducting a job evaluation for the first time and a useful lens for those evaluating whether their existing systems adequately capture these demands.
Promotion of Bias Awareness
In a similar vein, the EIGE toolkit devotes significant content to the topic of gender bias in job evaluation. Its own “Tool 0” introduces the concept (under How to conduct a gender-neutral job evaluation and classification) before employers even roll up their sleeves and get to work. EIGE explains that gender bias in job evaluations “encompasses the attitudes, assumptions, or stereotypes that influence how we perceive work that is typically performed by women or by men” (p. 17). It further distinguishes structural gender bias, which “exists within systems and cultures,” from personal gender bias, which is based on “one’s own experiences and beliefs,” emphasizing that awareness of both is critical for ensuring the employer pay structures appropriately value the work that both men and women do.
That gender bias may be embedded in existing pay structures—and may go unnoticed at the personal or structural level—is something employers must reckon with as they prepare for the Directive. Employers preparing for the Directive should not assume that existing pay structures are free from gender bias simply because they were built on formal methodologies; the toolkit's bias awareness guidance offers a useful framework for pressure-testing that assumption.
Addressing Complementary and Variable Pay
The Directive spotlights complementary or variable components of pay, which it describes as “any benefits in addition to the ordinary basic or minimum wage or salary, which the worker receives directly or indirectly, whether in cash or in kind” (Preamble, 21). This includes compensation separate from basic wages or salary, such as bonuses, commissions, and sick pay. The Directive will require employers to report gender pay gaps specifically for worker complementary and variable components of pay, effectively increasing transparency and obliging employers to address any associated gender gaps that cannot be justified.
The EIGE toolkit highlights practices that can lead to gender inequities in complementary or variable pay components, and it provides guidance to help employers avoid encoding these practices into their compensation policies. For example, the toolkit describes how bonus plans that reward long hours and bonus program eligibility criteria that may preclude workers who take childcare-related leave may systematically disadvantage women. When bonus programs are only offered to a subset of workers performing work of equal value (i.e., spanning multiple jobs) and those roles tend to be male-dominated, women may further be disadvantaged.
The toolkit emphasizes evaluating existing complementary and variable pay components within worker categories reflecting work of equal value. The aim is to ensure current practices don’t systematically disfavor women. The toolkit reinforces the relevance of those less visible and often undervalued job demands and how they should also be considered when creating or revising policies for variable and complementary pay. This is sound advice regardless of whether an employer is constructing new pay structures or evaluating its current practices.
Offering Scaled Approaches
The Directive will require covered employers with 100 or more workers to eventually report gender pay gaps, although individual EU member states can opt to require employers with fewer than 100 workers to report information on pay. The EIGE toolkit fortunately provides grounded, scalable job evaluation guidance to employers of all sizes, including “micro-organizations” with fewer than 10 workers, small organizations with 10 to 49 workers, and medium (50 to 249 workers) and large (250+ workers) organizations “with diverse job roles and structured HR processes.” The process of establishing pay structures varies materially depending on the number of workers in the organization, and the toolkit provides detailed guidance for three separate approaches based on organization size.
What Employers Still Need to Know
The toolkit may reflect more of an advocacy framing than a truly gender-neutral methodology. Additional criteria may be missing for complex organizations, and compliance could mean significant costs and friction with external labor markets.
Advocacy-Based Framing
The EIGE toolkit places a heavy emphasis on mitigating gender bias in job evaluation, and some employers may view the guidance offered as leaning more toward advocacy than gender neutrality. The bias checks throughout only call attention to whether work commonly performed by women is undervalued. The toolkit sets default weights for emotional effort, perhaps more commonly associated with female-dominated roles, higher than physical effort, which tends to be associated with male-dominated roles. Correcting for past bias is not wrong, and it is clearly a prime objective of the Directive. However, a job evaluation toolkit framed as “gender-neutral” should use gender-neutral methods to produce gender-neutral results.
Employers adopting this toolkit or reviewing their pay structures and policies may choose to self-educate about other biases affecting job evaluation and should anticipate situations where certain male-dominated roles (e.g., those with high physical risk and adverse working conditions as well as skilled trades) are revealed to be undervalued. The Directive’s reporting obligations and justification or remediation requirements are bidirectional; employers will need to address pay gaps of at least 5% in any worker categories to the disadvantage of women and of men. This underscores the importance of adopting job evaluation methods that are truly gender neutral.
Missing Job Evaluation Criteria
Although the EIGE toolkit’s framework of compensable factors includes many critical, gender-neutral factors, some employers may find it lacking when it comes to dimensions such as accountability and decision-making authority. Elements of these are sprinkled among some subfactors, which may work well for smaller employers. However, for organizations with deep hierarchies, these factors may be particularly important and are missing from the toolkit.
Other job evaluation frameworks include a factor that formally accounts for the impact that a role’s decisions, outputs, or errors can have on the organization. Although the EIGE toolkit includes a responsibility dimension with four subfactors, this scope of impact concept is not part of it. Employers may argue that roles with greater organizational impact should be assigned to higher levels within a pay structure and be compensated more. While the toolkit allows employers to add subfactors, it doesn’t provide guidance on how to identify gaps such as these.
Scale of the Undertaking
There’s no way around the fact that defensible job evaluation, including for the purposes of the Directive, requires analysis of every job within an organization. The toolkit outlines steps to form committees, pull together and review existing job information, administer questionnaires, conduct interviews, etc., so that every job can be evaluated and classified. However, the toolkit doesn’t hint at how much work is involved. This undertaking can stretch the capabilities of smaller organizations, while the sheer number of jobs within large or multinational organizations can make this an inordinately expensive, multi-year effort.
For employers reviewing an existing job evaluation system, assessing whether the methods and results satisfy the Directive’s criteria may be less onerous. But if the compensable factors do not meet the Directive's requirements, shoring up an existing job evaluation can be a heavy lift. Certainly, the goal of the toolkit is to make job evaluation accessible for employers. But whether an employer is starting from scratch or reviewing prior job evaluation work, the nature and complexity of the work lend themselves better to experienced professionals than to teams undertaking it for the first time alongside other responsibilities.
Squaring Equal Value with the Market
In a world without the Directive or the EIGE toolkit, once jobs are evaluated and slotted into levels comprising work of equal value, they are typically benchmarked according to the labor market. This enables the pay ranges of different jobs (or job families) within the same pay level to be adjusted higher or lower depending on the market, and it also allows employers to decide how competitively they wish to pay their workers relative to the market. However, employers won’t find any of this information in the EIGE toolkit.
This is not surprising. As discussed in a previous installment, the Directive seeks to reshape the labor markets through internal equity, not the other way around. The rationale is that if the existing labor markets are segregated and continue to suppress wages for certain female-dominated roles, then the EU must effect change on the labor markets themselves. Enforcement of equal pay for work of equal value through employers is the vehicle to effect this change.
But labor markets will not change overnight, and in the interim employers face a practical problem. They are likely to encounter situations where job evaluation results identify a set of jobs as having equal value, but the labor market points to materially different pay ranges for some of those jobs. A pay system that incorporates different market-based ranges across jobs of equal value is more likely to produce reportable gender pay gaps than one that does not. Employers should also not necessarily expect labor market conditions to serve as a gender-neutral justification for a pay gap.
Employers implementing job evaluation for the first time might discover this issue when comparing the current pay of workers with new ranges established according to the EIGE toolkit. And it would behoove employers with existing compensation structures to proactively analyze current worker pay within categories of equal-value jobs, preferably under the direction of legal counsel, with attention to applicable privilege protections, before the Directive’s looming reporting deadlines. Addressing this issue can be complicated—and potentially expensive when faced with having to increase worker pay across multiple jobs to close pay gaps.
Next Steps for Employers
The updated EIGE toolkit provides a wealth of useful information that can serve as a starting point for employers as they look to comply with the Directive. The toolkit’s job evaluation frameworks, with some exceptions, are credible and can help employers appreciate the scope of work they may need to accomplish to establish pay structures based on gender-neutral criteria, or evaluate existing structures. The amount and complexity of work involved—from identifying gaps in compensable factors to evaluating every role to reconciling results with existing structures—is substantial enough that many employers will benefit from the guidance of experienced compensation-consulting and pay-equity professionals.
Per the Directive, EU member states are tasked with making analytical tools and methodologies available to employers to establish these gender-neutral pay structures. Those tools or methods may differ from what is in the EIGE toolkit—and national legislation may prescribe more specific requirements or different approaches. Although the legislation waiting game for employers continues, preparing for the Directive, which includes anticipating and proactively allocating resources to job evaluation work, is something that can and should be done now.
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