One of the biggest challenges facing employers preparing for the Directive is how to categorise workers. This was the focus of the first webinar in our five-part PTD webinar series.
In this article, we outline what the Directive requires and explore one of the key practical questions discussed by our panel: what are the main options for categorising workers, and what are the advantages and disadvantages of each?
The webinar also examined a range of related issues, including work of equal value, the adequacy of existing grading structures, the role of worker representatives, and approaches being taken across Member States. The recording and accompanying slides, which explore these topics in greater detail, can be accessed here.
The categories of workers (i.e. those performing the same work or work of equal value) are important because they form the basis of several key obligations under the Directive. This includes:
Getting categorisation right is therefore critical. If employees are grouped incorrectly, it may affect the accuracy of pay gap reporting and make it harder to identify or justify differences in pay.
While the Directive requires employers to create categories of workers, it does not prescribe a single methodology for doing so. Instead, it is built on the long-established EU law principle of ‘equal pay for equal work or work of equal value’. The focus must therefore be on the value of the work being performed, rather than simply on job titles or existing organisational structures.
Nevertheless, the Directive does provide some direction. The criteria to assess whether work is of equal value should be agreed upon with the workers’ representatives (where such representatives exist) and, must take into account at least four factors: skills; effort; responsibility; and working conditions.
The Directive also makes clear that soft skills, such as communication, interpersonal and organisational skills, should not be undervalued.
Subject to local laws transposing the Directive, employers have flexibility to determine how much weight to give each factor and may include additional criteria where these are relevant to the role (upon agreement with the workers’ representatives). They must also take into account any specific rules contained within local legislation.
In other words, the Directive sets the destination, but leaves employers with a degree of flexibility in choosing the most appropriate route to get there. Below, we look at four potential routes organisations can take when categorising workers.
Option one: Conduct a points factor job evaluation
This approach is often regarded as the 'gold standard' and is broadly aligned with guidance from the European Institute for Gender Equality (‘EIGE’).
A points factor methodology typically involves:
• identifying relevant factors such as skills, effort, responsibility and working conditions;
• assigning weightings to those factors;
• assessing each role against those criteria;
• allocating points to each position; and
• grouping jobs into grades or levels based on the results.
The focus is on the role itself rather than the individual performing it. The resulting grades or levels then become the categories of workers for the purposes of the Directive.
The main advantage is credibility. The EIGE guidance supports this type of analytical assessment, and some Member States appear to favour similar methodologies in their implementation plans.
However, the process can be expensive and time consuming. Employers may need detailed job descriptions, evaluation committees and specialist support. Once completed, organisations may also find themselves stuck with certain groupings that, on reflection, they don’t necessarily agree with. It can then be difficult to challenge these groupings later down the line in, say, an equal pay claim given the extensive analysis that can underpin them.
Option two: Use a levelling/classification methodology
The key difference between a classification approach and a more traditional job evaluation is that classification focuses on grouping roles into broad levels which represent the ‘best fit’ for a role, rather than assigning precise point scores to every factor.
Classification is a method that employers of all sizes and resources can deploy. But because it is quicker and simpler, it might be of particular help for those employers striving to meet the Directive’s requirement for objective, gender-neutral job categorisation without building a full analytical evaluation system.
A key advantage of this approach is that it is usually the least disruptive option for employers. Many multinational organisations already use grading or levelling structures to organise roles and determine pay, allowing them to build on existing frameworks rather than create a new job evaluation system from scratch. This can save time and cost at a point when employers are already preparing for multiple obligations under the Directive. It also tends to align with existing pay and workforce structures, making it easier to explain internally.
A key challenge is that it is less analytical than a full job evaluation exercise and may not satisfy the legal requirements that emerge in some Member States.
Option three: Rely on collective agreements
In many European countries, collective bargaining agreements (‘CBAs’) already contain worker classifications and pay structures.
Using those classifications can appear attractive because:
• worker representatives are familiar with them which may make engagement and consultation easier; and
• pay arrangements (at least at a collective bargaining level) often already align with the categories they create.
In some jurisdictions, local legislation may even encourage or favour this approach.
Yet employers should not assume that CBA classifications automatically satisfy the Directive. As highlighted during the webinar, responsibility ultimately remains with the employer. Even where a collective agreement contains established job categories, employers may still need to assess whether those categories meet the Directive's requirements.
Another challenge is that collective agreements are regularly renegotiated. Changes to classifications could create uncertainty and affect how equal pay comparisons are made over time.
Option four: Adopt a mixed approach
Many employers are exploring hybrid solutions.
For example, organisations may combine existing grading structures with another organisational factor such as job families or functions. A poll taken during the webinar highlighted that, of those attending, this approach was the most popular.
This reflects a practical desire to use frameworks that are already familiar to employees and aligned with existing pay practices, rather than introducing entirely new job evaluation systems. For some organisations, this may prove to be an effective and proportionate approach, provided they can justify it against the Directive’s requirements.
However, each additional organisational layer added on top of the output of a classification or evaluation method can increase complexity and may make it harder to demonstrate that the resulting categories reflect work of equal value, rather than organisational convenience or pay administration practices.
Ultimately, there is no single ‘correct’ categorisation methodology. Points factor job evaluation, grading and levelling structures, collective agreement classifications and mixed approaches may all be viable starting points. The most appropriate choice will depend on the organisation’s size, existing job architecture, workforce profile and geographic footprint.
Whatever approach is adopted, employers must be able to demonstrate that it delivers an objective and gender-neutral assessment of work of equal value.
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