Strengthening Employee Representation Through Joint Pay Assessments

Introduction 

A joint pay assessment involves cooperation between employers and employee representatives to analyze and address pay disparities. In line with the EU Pay Transparency Directive, employers must act within a reasonable timeframe to address unjustified pay differences and may involve labor inspectorates or equality bodies in the process. The Directive emphasizes the role of employee representatives such as worker councils and union representatives in advocating for fair pay practices, ensuring they are integral to the remediation process.

The joint pay assessment process in Article 10 is a significant step toward empowering employees and their representatives. It creates a structured approach to identifying and resolving pay disparities, ensuring employee voices are central to discussions on fairness and equity. By involving representatives in pay assessments, the Directive reinforces their role as key stakeholders in achieving pay transparency and compliance.

Elaboration on Article 10: Joint Pay Assessment

Article 10 of the EU Pay Transparency Directive introduces a mechanism to address unexplained pay disparities within organizations. This provision underscores the collaborative efforts required between employers and employee representatives to identify and resolve gender pay gaps. 

When Is a Joint Pay Assessment Triggered?

A joint pay assessment is mandated when all the following conditions are met:

1. Significant pay gap
   A gender pay gap in the average level of pay between male and female workers of at least 5% exists.
2. Lack of justification
   The employer cannot justify the gap based on objective, gender-neutral criteria such as differences in value of work (i.e. through job grading), differences in job tenure, differences in performance (i.e. through results from continuous performance management / assessments), market factors (i.e. through grade + profession, job family or geographic location), collective agreements (i.e. through varying pay scales by sector or geography).
3. No remedial action
   The employer fails to address and resolve the disparity within six months after submitting their pay report.

These criteria ensure that joint pay assessments are only required in situations where pay inequities are significant and unexplained.

Key Features of a Joint Pay Assessment

1. Collaborative process

• The assessment is conducted in cooperation with employee representatives, ensuring worker perspectives are incorporated.
• In the absence of formal representatives, employees can designate individuals for the purpose of the assessment.

2. Scope of analysis

• The assessment must address:
• The proportion of male and female workers within each category of work.
• Average pay levels for men and women, including complimentary and variable compensation components.
• Justifications (or lack thereof) for any observed pay gaps.
• Measures taken (or needed) to address unjustified disparities.
• Evaluation of prior measures from earlier assessments, if applicable.

3. Outcome and remedial measures:

• The joint pay assessment should result in concrete measures to eliminate unjustified pay gaps.
• Employers are expected to implement these measures within a reasonable timeframe, collaborating with representatives or involving labor inspectorates or equality bodies if needed.

4. Documentation and reporting:

• The results of the joint pay assessment must be documented and made available to employees and their representatives.
• Employers are required to share this information with monitoring bodies and equality institutions upon request.

Implications of Joint Pay Assessments

1. Strengthened role of employee representatives
   Article 10 empowers employee representatives by giving them an active role in analyzing and addressing pay disparities. This collaboration fosters transparency and trust between employers and workers. In some countries such an approach is already common practice, in others it will create new challenges.
2. Increased accountability for employers
   Employers must provide justifications for pay gaps and take actionable steps to resolve them. The structured nature of the joint pay assessment ensures that pay discrepancies cannot be ignored or dismissed without scrutiny.
3. Support for compliance
   The process aligns with the Directive’s broader objectives of fostering gender-neutral pay practices and addressing structural inequities in compensation systems.
4. Administrative burden
   While the Directive aims to minimize costs and complexity, joint pay assessments require coordination, data analysis, and documentation, which could pose challenges for organizations, particularly those without established systems for job evaluation or pay reporting.

Best Practices for Employers

To effectively comply with Article 10, organizations should:

1. Establish robust pay structures
   Use gender-neutral job evaluation systems such as gradar, and formalized pay structures and processes to ensure fair pay practices and justify pay differences.
2. Engage employee representatives
   Foster a collaborative relationship with representatives to streamline joint pay assessments.
3. Leverage technology
   Use digital tools for compensation analysis and reporting such as Trusaic to reduce administrative burdens.
4. Train HR teams
   Equip HR and management teams with the knowledge, processes and tools to conduct and respond to pay assessments and manage compensation effectively.

Conclusion

Article 10 introduces a pivotal mechanism for addressing pay inequities through a structured, collaborative approach. By mandating joint pay assessments in cases of significant, unjustified gender pay gaps, the Directive not only promotes compliance but also strengthens employee advocacy and organizational accountability. For employers, this provision serves as both a challenge and an opportunity to build fairer and more transparent pay systems.