The EU Pay Transparency Directive is far more rigorous than any pay transparency legislation previously introduced, requiring organisations to closely examine their compensation and talent management processes.
Several requirements of the directive require the creation of ‘categories of workers’, or job groupings, to enable work and pay to be compared.
To comply with the right for employees to know the criteria being used for determining pay, the amount comparable employees are paid on average, and the equal pay disclosure and reporting requirements, the first step is to define Categories of Worker.
The EU Directive requires jobs to be grouped into categories of worker; namely workers performing the same work or work of equal value.
A ‘category of workers’ is defined as:
“Workers performing the same work or work of equal value grouped in a non-arbitrary manner based on the non-discriminatory and objective gender-neutral criteria referred to in Article 4(4), by the workers’ employer and, where applicable, in cooperation with the workers’ representatives in accordance with national law and/or practice.”
Although it refers to workers, it is helpful to think of this as being about jobs and not people. For this reason, we refer job groupings.
To understand how to group jobs and create categories of workers, it is important to understand what we mean by equal work or work of equal value. The Directive 2006/54/EC Article 4(4) defines this as “the same work or for work to which equal value is attributed”
“Workers have the right to request information on their individual pay level and the average pay levels, broken down by sex, for categories of workers performing the same work as them or work of equal value to theirs.” (article 7)
Why is it important to group jobs?
Many companies pay employees based on market rates, and there can be large differences between jobs, even when they are evaluated as equal.
This is no surprise as the market reflects society and incorporates the historical undervaluation of female and minority work. Grouping jobs enables companies to understand which jobs are of equal value, and to understand if there are pay discrepancies that need to be either explained or corrected.
The main issue is that companies have often not looked at jobs in terms of skills, effort and responsibility, as required by this legislation.
To ensure organisational readiness for EU transparency legislation and a robust approach to managing equal work or work of equal value, organisations need to be able to group and analyse their jobs in three ways:
1. Jobs of equal work
This involves identifying jobs where the same work is being done, usually jobs with the same job title and/or job description. Employees can request to see the pay level of other employees who appear to be doing the same work.
This means that organisations need to have a way of easily consolidating and comparing pay structures for jobs of equal work.
2. Jobs doing similar work
Jobs which involve similar work at a similar level or jobs with similar characteristics in terms of the role’s scope (skill, effort, responsibility and working conditions). Employees may claim that their job is similar to another in a different area and request to see the pay level.
This means that organisations need to have a way to easily consolidate and compare pay structure across jobs that could be similar both in terms of the work and show that you understand both the content and value of each job and can point to where the similarities and differences are.
3. Jobs of equal value
Jobs of equal value are those roles where the factors used to determine their value are of equal value i.e., all jobs that have similar levels of value across skills, effort, responsibility, and working conditions.
The value could be defined as the level, the grade or, if a more robust evaluation process is in place, the evaluation score. Employees can request to see the pay level of other employees whose jobs are of the same level of value.
This means that organisations need a way to easily consolidate and compare jobs of equal value and have a clear justification for any differences in pay.
Employees have a right to request information about pay levels for groups of workers who perform what is deemed to be the same work, similar work, or work of equal value as them
Job groupings are the key first step in our Roadmap to Prepare for the EU Pay Transparency Directive guide as they are key to analysing and reporting on equal work of equal value.
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