"(…) Directive  2023/970, (is) aimed at strengthening the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms (the Pay Transparency Directive)"

from EU action for equal pay - European Commission

 

We (hopefully) all agree : professional identical twins should be remunerated the same, regardless of gender. Discrimination for whatever ground is not acceptable. Period.  That is why the directive explicitly states "between men and women".

 

Now think of every discussion, podcast, article, LinkedIn post, soundbite… about this topic you were subjected to in the past months. It typically takes less than 3 paragraphs or 5 minutes before the gender-aspect is all but forgotten and the discussion broadens to equity in general, across / within / regardless of genders.

 

Passing by the complexities in defining "work of equal value", the bigger challenge lies in what comes after that: agreeing on what are acceptable factors to split - and thereby justify differences in pay between - apparent professional twins.

 

Let's be honest: most (if not all) companies have pay-differences for seemingly identical job-holders that they can't or don't want to explain. Most of these are for historical reasons: company-wide or employee-specific.

 

• Mergers and acquisitions for example are notorious for creating differences in pay between employees from the legacy firms. Differences in reward philosophy, competitive market, company profitability and budgets are just a few explanations. "Harmonizing / equalizing" often implies moving to highest payer and is not always possible or even recommendable, resulting in historical differences being carried along for a long, long time.

So let me ask you: is "legacy-firm" a justifiable, acceptable reason for pay differentiation?

 

• On an individual level: recent hires often are paid higher than their colleagues with a long tenure. I know there are firms that immediately adjust salaries of existing employees when they have to pay more for new joiners in the same role. But I know many, many more that don't do that and rely on Annual Compensation Cycles to gradually correct this - which can take years, if they ever catch up...

"Pay New Hires higher than current employees" is probably not a deliberate, strategic decision but rather driven by need and market circumstances. Is that a "justifiable " reason for pay differentiation?

 

• All employees are people that bring their own background, education, character, experience, culture, values, ambitions, … to the job. In defining compensation (-growth) that will be taken into account to the extent it is reflected in measurable and demonstrated skills and competencies and/or performance. But how about those non-measurable elements, or those we don't want to recognize (admit?) or even know that they differentiate people?

What if someone's background brings something undefined or even unmeasurable but nevertheless valuable to the job and company - but circumstances don't allow them to move to other or bigger roles? Is "potential" an acceptable differentiator?

 

The interesting thing of the Directive is that all of the above differences in pay are no (legal) problem as long as they don't (accidentally) coincide with gender!

 

As HR and Reward professionals we have a dictionary of buzz-words, jargon, smoke-and-mirrors stories and HR-speak to explain why pay is what it is when we can't pinpoint the exact reason.  In my simple mind, the Directive tells us to "put our money where our mouth is" and make it concrete.

On a group-wide, systemic level (i.e. for a statistical meaningful sample) that is perfectly sensible and a fair ask.

On an individual, person-to-person comparison (whether of the same or a different gender) that becomes much more challenging. Some reasons we or our counterparts / stakeholders may not want to hear.

 

"It is what it is" may be very frustrating as an answer, but we should be so honest as to admit that some differences are - although not explainable/justifiable - not discriminatory or even on-purpose…

 

Thoughts?