By Don Lustenberger
BLOG OVERVIEW: The European Union Pay Transparency Directive requires employers to report gender pay gaps for categories of workers performing "the same work or work of equal value"—two complementary but distinct legal concepts. While same-work comparisons align with conventional job structures, work-of-equal-value comparisons require employers to evaluate roles using objective, gender-neutral factors like skills, effort, responsibility, and working conditions, rather than market rates or organizational hierarchies. Employers should begin developing legally defensible worker categories now by working with experienced pay equity consultants and legal counsel ahead of the June 2026 transposition deadline.
A cornerstone provision of the European Union (EU) Pay Transparency Directive requires covered employers to report gender pay gaps for “categories of workers,” defined as those “performing the same work or work of equal value.” These categories are more than just reporting units; they comprise a crucial pay analysis framework with potential compliance and enforcement implications. Critically, workers need not share job titles or perform similar duties to be compared under the Directive’s equal-value framework.
While the Directive provides some specific parameters for deriving these categories, this may be the first time many employers are required to use them systematically for pay-gap analysis and reporting. Even where pay structures are well developed, analyses grounded in work of equal value may bring to the surface pay disparities that conventional comparison frameworks did not previously reveal.
This piece intends to address the following questions about the Directive and worker categories:
- What legal frameworks are tied to the worker category concepts of same work and work of equal value?
- Why is the analytical framework based on work of equal value particularly consequential under the Directive?
- How does the EU expect employers to implement worker categories reflecting work of equal value under the Directive?
- What should employers do now to prepare?
Key Principle 1: Same work and work of equal value map to different analytical frameworks within EU equal-pay law, each addressing different forms of pay inequality.
The concept of same work1 is tied to the tasks workers perform and the context in which those tasks are carried out. Under this framework, pay comparisons are made only among workers whose duties, responsibilities, and working conditions are sufficiently similar.
Work of equal value is not directly tied to the similarity of tasks performed. Instead, it concerns whether the value of work performed among roles may be deemed comparable when assessed using objective, gender-neutral factors. Although two roles may involve substantially different duties, an employer may determine that those roles contribute comparable value. Pay comparisons under this framework may extend across roles that differ in content but are treated as equivalent within an employer’s value structure.
Although the Directive frequently pairs same work and work of equal value, this phrasing reflects their structural relationship rather than conceptual equivalence. The concepts are therefore complementary rather than interchangeable, and both carry implications for how worker categories must be constructed.
Key Principle 2: Organizational job structures align unevenly with the Directive’s comparison frameworks.
In same-work contexts, pay disparities are easier to spot and remedy, often because workers in the same job titles or roles perform similar duties. Common organizational job architectures therefore support comparisons of those performing the same work.
By contrast, conventional job architectures do not always immediately reveal whether different roles are valued the same per the Directive’s definition. This distinction is particularly important because many compensation systems blend internal job valuation with external market pricing when establishing pay grades or levels. So, same work captures the most readily observable instances of work-value equivalence, while work of equal value extends the equal pay framework beyond roles defined by task similarity.
Key Principle 3: Horizontal segregation helps explain why pay comparisons among those performing work of equal value are both necessary and potentially difficult.
Horizontal segregation refers to the concentration of men and women in different roles or occupations, often resulting in male-dominated and female-dominated work clusters. This structural pattern has several important consequences. First, it limits direct comparisons of pay between work performed by men and women. Second, it fosters segregated labor markets where pay for male- and female-dominated roles may diverge over time.
Because labor markets shape pay levels, two roles deemed comparable in value by an employer can nonetheless command very different pay. This reflects the fact that the internal process of assigning value to jobs is distinct from how market-based pay levels evolve. Thus, even though an employer may value female- and male-dominated roles similarly, their compensation levels may diverge.
Key Principle 4: The Directive is designed to decouple the valuation of work from gender-segregated employment markets and instead anchor it in objective, gender-neutral factors.
The EU treats horizontal segregation as a barrier to equal pay for work of equal value, and the Directive does a few things that attempt to correct this. First, it specifies clear, gender-neutral factors for organizations to use when conducting job evaluation. This is the systematic practice of ascribing internal value to the work of various roles in an organization. Per the Directive (Article 4, Item 4), the factors used to evaluate work “shall include skills, effort, responsibility and working conditions, and, if appropriate, any other factors which are relevant to the specific job or position.”
Conspicuously absent from these gender-neutral factors are elements frequently relied upon in organizational pay systems. For example, market rates are not included. That’s because assigning value to work using gender-segregated markets would serve only to perpetuate the problem the EU is trying to solve. Also absent from these factors are horizontal features of an organization’s job architecture, such as departments, divisions, or job families; these are not basic determinants of value. Differences in the value of work that can be attributed to these structures should be captured by any objective job evaluation factors themselves.
Second, the Directive requires organizations to report gender pay gaps for categories of workers performing the same work or work of equal value. Importantly, organizations should not interpret this language to mean they only need to rely on one of these comparison bases. The set of worker categories that organizations create needs to withstand scrutiny under both equal pay concepts: same work and work of equal value.
Though categories reflecting same work often align with existing organizational job architectures, categories based on work of equal value introduce distinct analytical challenges. Assessing the value of work requires organizations to conduct job evaluation using the Directive’s prescribed factors. Job evaluation outcomes do not automatically determine worker categories, however. Organizations must exercise professional judgment to create legally justifiable groupings. This step involves carefully determining how to aggregate different roles valued similarly—a topic we will examine in greater depth in a forthcoming piece.
Moreover, when employers first conduct pay analyses within categories based on work of equal value, some may be surprised by what they find: gender pay gaps large enough to require justification or remediation. This outcome is particularly plausible where labor markets are horizontally segregated and compensation levels for different roles have diverged over time. In such cases, disparities may surface even where prior employer-wide pay gap analyses comparing all workers together did not indicate material differences. This can happen because those pay differences were masked by aggregation or because horizontal structural variables (like job family or job title) were used as control variables in those analyses—another topic we’ll address in a future issue.
Key Principle 5: Member-state legislation and guidance may vary, but employers bear ultimate responsibility for constructing worker categories that withstand regulatory and legal scrutiny and for addressing gender pay gaps identified within those categories.
As member-states transpose the Directive into national law, additional guidance on how employers should construct worker categories for pay-gap reporting may emerge. Regardless of the nature or specificity of this guidance, employers still need to ensure that their worker category frameworks are analytically coherent and legally defensible. And for employers that encounter pay disparities large enough to require justification or remediation, it’s critical to have the right expertise in place to support these analytically demanding tasks.
Given the importance and implications of determining work of equal value, employers should work closely with legal counsel and experienced compensation and pay-equity consultants to develop worker categories that align with job evaluation outcomes and support defensible pay practices.
To sign up for more deep dives and updates regarding the EU Pay Transparency, click here.
[1] The Directive primarily uses the term “same work,” although prior EU equal pay frameworks often referred to “equal work.” For present purposes, these terms refer to comparisons grounded in task similarity rather than job valuation.”
