How Job Levelling Supports Pay Transparency

Job levelling, sometimes known as job evaluation or classification, is a key process for ensuring pay transparency within organisations. By systematically categorising roles based on objective criteria, such as skills, responsibilities, effort and impact, job levelling provides a foundation for fair and equitable reward practices.

With the EU Pay Transparency Directive due to take effect in June 2026, job levelling has become a critical tool for compliance with new regulations aimed at eliminating pay disparities.

The Connection Between Job Levelling and Pay Transparency

The aim of pay transparency is to create openness around how pay decisions are made and ensure employees understand the rationale behind their compensation. It helps address unjustified pay gaps and promotes fairness across the workforce. Pay transparency is also a good tool for employee retention, with research showing that companies with internal salary transparency have the lowest rates of employees planning to find new roles in the next 12 months. Workers at these companies also boast the highest levels of job satisfaction.

However, achieving true pay transparency requires a structured approach to evaluating roles, which is where job levelling comes in.

Issues can arise in an organisation when ways of determining pay vary between teams or business units. The same role (e.g. Project Manager) may exist in many different teams, but if different processes determine the pay for each of these roles, this can lead to pay inequities. Job levelling provides organisations with a framework to assess the relative value of each role systematically.

Using objective criteria such as skills, effort, responsibility, and working conditions to determine the level of a job ensures that pay decisions are based on legitimate factors rather than subjective biases or arbitrary classifications.

A structured, organisation-wide job levelling approach makes it easier to justify pay differences between roles or individuals and helps ensure that employees performing equal work or work of equal value are rewarded equitably.

Job levelling provides organisations with a framework to assess the relative value of each role, systematically

Without job levelling, organisations can be vulnerable to accusations of bias or non-compliance with legislation such as the EU Pay Transparency Directive.

Understanding the EU Pay Transparency Directive

The EU Pay Transparency Directive represents a significant step forward in tackling pay inequity. It aims to address the EU gender pay gap, which currently stands at 12%, although there is much variation between member states.

The key provisions of the Directive include:

• Pay transparency for job-seekers – Employers will have to provide information about the initial pay level or its range in the job vacancy notice or before the job interview
• Right to information for employees – Employees will have the right to request information from their employer on their individual pay level and on the average pay levels, broken down by sex, for categories of workers doing the same work or work of equal value.
• Reporting on gender pay gap – Employers with at least 100 employees will have to publish information on the pay gap between female and male workers.

The Directive states that organisations should use gender-neutral criteria to evaluate jobs and ensure transparency in pay structures. While it does not explicitly require job levelling frameworks, it strongly emphasises the need for structured approaches to categorising roles based on objective, gender-neutral factors.

The guidance refers to the fact that “where gender-neutral job evaluation and classification systems are used… they are effective in establishing a transparent pay system and are instrumental in ensuring that direct or indirect discrimination on grounds of sex is excluded”.

Other Benefits of Job Levelling

A well-implemented job levelling framework has other benefits beyond pay transparency compliance:

• It provides employees with clear career progression paths, enhancing talent retention and development by outlining the necessary skills for advancement
• It ensures uniformity in job titles and expectations, making it easier for employees and managers to understand roles and responsibilities.
• It creates a common language for HR teams, streamlining decision-making across recruitment, performance management, and rewards.

In summary, as global expectations around pay transparency continue to rise, investing in robust job levelling frameworks will not only ensure compliance with legislation but also yield significant organisational benefits. These include streamlining HR processes, enhancing employee retention by providing clear career progression opportunities and creating a culture of fairness and trust among employees. 

To learn more about Job levelling and the EU Pay Transparency Directive, join one of our on-demand webinars, or download our guide, A Roadmap to the EU Pay Transparency Directive.