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Directive and rights
EU Pay Transparency Directive
Directive (EU) 2023/970, introduced in May 2023 sets EU-level pay transparency rules including pay information rights, gender pay gap reporting, and joint pay assessment concepts.
Read in Directive guideGender pay gap reporting
The Directive's company reporting requirement covering gender pay gap metrics, variable or complementary pay, quartiles, and gaps by groups of employees are defined in Article 9.
Read in Reporting metricsIndividual's right to information on pay
Defined in Article 9.1(g), the metric requires individualized gender pay gaps disclosure between employees in groups performing the same work or work of equal value, broken down by basic pay and complementary or variable components.
Employee representative
An employee representative body or person involved under applicable law, collective arrangements, or local process. Representatives may need access to methodology or consultation depending on the issue.
Joint pay assessment
A deeper pay assessment with employee representatives required under Article 10 when a pay gap above 5% is left unresolved for over 6 months.
Read in Directive guideObjective gender-neutral criteria
Criteria relevant to the job or pay decision that are not directly or indirectly based on gender, and that are applied consistently and with evidence.
Read in Equal valuePay components
Pay
Ordinary basic or minimum wage or salary, plus other cash or in-kind consideration received directly or indirectly from the company.
Read in Pay componentsPay level
Gross annual pay and the corresponding gross hourly pay.
Read in DefinitionsBasic pay
The ordinary wage or salary for the role before bonus, commission, allowances, benefits, or other variable components.
Read in Pay componentsComplementary pay
Additional cash or in-kind pay beyond ordinary base pay, including allowances or benefits where they are in scope. Depending on national implementation, complementary pay may be in- or excluded in the Directive's reporting.
Read in Pay componentsVariable pay
Pay that changes with performance, sales, profit, targets, discretion, or other conditions, such as bonus or commission.
Read in Pay componentsFull-time equivalent
A standardised measure of working time used to compare pay consistently where employees work different hours or patterns.
Actual pay
The amount actually paid to the employee, rather than a target opportunity or theoretical entitlement. Actual pay is needed to reveal outcome differences.
Read in Pay componentsReporting metrics
Gender pay gap
The difference in average pay levels between female and male employees, expressed as a percentage of average male pay.
Read in Metric aMean gender pay gap
The gap calculated using average female pay and average male pay.
Read in Metric aMedian gender pay gap
The gap calculated using the middle female pay value and the middle male pay value.
Read in Metric cPay quartile
One of four equal groups of employees after employees are sorted by pay from lowest to highest.
Read in Metric fRecipient rate
The proportion of women and men receiving a pay component, such as variable or complementary pay.
Read in Metric eReporting population
The employees included in the calculation after applying coverage, entity, country, date, employment status, and data-quality rules.
Read in Analysis datasetEqual-value grouping
Equal pay
The principle that women and men should receive equal pay for equal work or work of equal value.
Read in Equal valueSame work
Work that is materially the same in role content, duties, responsibility, skills, and working conditions.
Read in Same workSimilar work
Work assessed as providing equal value with objective and gender-neutral criteria, such as duties, responsibility, skills, and working conditions.
Read in Same workWork of equal value
Different work assessed as comparable in value using objective, gender-neutral criteria such as skills, effort, responsibility, and working conditions.
Read in Equal valueGroup of employees
Employees performing the same work or work of equal value, grouped in a non-arbitrary way using objective, gender-neutral criteria.
Read in Employee groupsJob evaluation
A structured method for assessing the demands of roles, often using factors such as skill, effort, responsibility, and working conditions.
Read in GradingGrading
A job architecture method that groups roles into levels or grades. It can support equal-value analysis if the criteria are objective and consistently applied.
Read in GradingStatistics
Mean
The arithmetic average: add all values and divide by the number of values.
Read in Reporting metricsMedian
The middle value when values are ordered from lowest to highest.
Read in Reporting metricsCoefficient
A model estimate showing the association between one variable and pay, after accounting for other variables in the model.
Read in OLS coefficientP-value
A statistical signal used to assess whether an estimated coefficient is distinguishable from zero. It is evidence, not a fairness verdict.
Read in Excel outputConfidence interval
A range around an estimate that signals uncertainty. Wide intervals mean the estimate is harder to interpret.
Read in Excel outputR Square
A model-fit measure showing how much pay variation is explained by the model. Higher fit is not the same as a fair pay system.
Read in Excel outputAdjusted analysis
Unadjusted pay gap
The raw average or median pay difference between women and men before controlling for role, grade, location, tenure, or other pay drivers.
Read in Unadjusted gapsAdjusted pay gap
An estimated pay difference after adjusting for selected pay-related factors.
Read in Adjusted gapsRegression
A statistical method that estimates how strongly a factor is associated with pay while holding selected other variables constant
Read in OLS regressionOLS
Ordinary least squares, a common regression method that estimates the line or model with the smallest squared prediction errors.
Read in OLS regressionLog pay
A transformed pay measure often used in regression so coefficients can be read roughly as percentage pay differences.
Read in OLS modelControl variable
A factor included in a statistical model so the analysis compares employees with similar pay-relevant characteristics.
Read in ControlsResidual gap
The part of a pay gap that remains after the selected factors have been accounted for. It is a signal for closer review.
Read in Adjusted exampleOaxaca-Blinder decomposition
A method that splits an average pay gap into a part associated with differences in observed characteristics and a residual part not explained by those characteristics.
Read in Oaxaca-BlinderExplained component
The part of a pay gap associated with observed differences such as grade distribution, job family, location, tenure, or performance.
Read in OB exampleUnexplained component
The residual part of a pay gap not accounted for by the chosen variables. It is a warning signal, not automatic proof of discrimination.
Read in OB exampleRemediation
Remediation
The action taken after a pay gap finding, including pay correction, process correction, communication, and monitoring.
Read in RemediationPay philosophy
The company's chosen approach to pay variation, such as equalising pay by design or allowing variation only where it is objectively explainable.
Read in Pay philosophyPay correction
A direct adjustment to wage, salary, allowance, bonus, or another pay component where a difference is not objectively justified.
Read in Action planProcess correction
A change to the decision process that created or maintained a pay gap.
Read in Action plan