EU’s Toolkit for Gender-Neutral Job Classification
With the Pay Transparency Directive, the EU has strengthened the requirements on how companies determine and document pay. As part of this development, the European Commission and the European Institute for Gender Equality (EIGE) have developed a toolkit for gender-neutral job evaluation and job classification. The toolkit is not legally binding but is expected to have significant practical importance as interpretative guidance on the Directive and as a methodological framework for companies’ work on equal pay.
Relevance in Danish law
On February 26, 2026, the Danish Ministry of Employment send a bill to amend the Danish Equal Pay Act for public consultation. The purpose of the bill is to implement Directive (EU) 2023/970 of May 10, 2023, on strengthening the principle of equal pay for men and women for the same work or work of equal value.
The current implementation deadline is June 7, 2026. However, the proposed bill provides for entry into force on January 1, 2027, partly due to the need for companies to prepare for the new requirements.
In this context, the establishment of pay criteria becomes a key element. The requirement of gender neutrality means that all jobs must be assessed based on uniform, objective criteria to ensure that work of equal value is paid equally regardless of gender.
Article 4(2) of the Pay Transparency Directive requires Member States to make analytical tools available to employers to support and guide their work with pay structures. The European Commission’s guidance may therefore serve as inspiration for Member States in developing their own tools.
The practical application of the EU toolkit
One of the core obligations under the Pay Transparency Directive is that employers must apply pay structures that ensure equal pay for the same work or work of equal value.
To comply with the Directive and the forthcoming legislation, employers must establish job and pay structures based on objective, gender-neutral criteria.
The European Commission’s and EIGE’s guidelines, published on March 26, 2026, are intended to support companies in meeting these requirements. The guidelines do not introduce new legal obligations but function as a practical manual to help companies ensure that their pay structures are objective, transparent, and free from gender bias.
The EU guidelines include nine different tools that companies can use depending on their size and organizational complexity. The tools are designed for direct practical use and support systematic job comparison, the use of objective criteria, and documentation of pay assessments.
In particular, tools 3–5 provide relevant guidance for establishing gender-neutral and objective methods for job evaluation and pay structure.
Tool 3 – Companies with fewer than 10 employees
For companies with fewer than 10 employees, a simplified method referred to as “Tool 3” is recommended. The method is designed for companies where formal job descriptions or structured pay systems often do not exist. It provides a practical basis for comparing jobs and establishing a simple pay structure. At the same time, it can serve as documentation that pay settings are based on objective and gender-neutral criteria, thereby reducing the risk of unconscious bias. The method assesses jobs based on four main criteria, including skills, responsibility, effort, and working conditions, all of which are scored on a scale from 0 to 5. Job categories can then be determined based on the final score. The method requires minimal administration and can be implemented by the business owner.
Tool 4 – Companies with between 10 and 250 employees
For small and medium-sized companies with between 10 and 250 employees, a more structured approach is recommended through the “pair comparison” method, referred to as “Tool 4.” All job positions are systematically compared based on the same criteria, resulting in a ranking that reflects the relative value of each position. For each comparison, one point is awarded to the job considered most valuable. Pay structures can then be established based on the total number of points. The method is well suited for organizations with a limited number of job functions but requires that assessments are documented and carried out on an objective basis to ensure consistency and prevent bias.
Tool 5 – Companies with more than 250 employees
For larger companies and organizations with more complex job structures, an analytical method referred to as “Tool 5,” based on the point-factor model, is recommended. This approach involves assessing jobs based on several detailed criteria and sub-criteria, which are weighted and assigned points, resulting in a total score for each job. The method makes it possible to analyze complex job structures and to ensure a consistent and well-documented assessment of the value of positions. It is also the method that most strongly supports compliance with the requirements for documentation and transparency.
Littler’s comments
Many companies already use so-called job families or other types of employee classification. However, existing pay structures may not comply with the requirements of the Pay Transparency Directive.
Both large and small companies should evaluate their existing pay structures in light of the Directive, which is expected to be implemented into Danish law as of January 1, 2027.
The European Commission’s and EIGE’s toolkit may serve as a useful starting point for companies beginning to work with pay and job structures in light of the obligations under the Pay Transparency Directive.
The scope of the guidance also highlights that working with pay structures is complex. Companies are therefore advised to seek legal advice in this process.
Disclaimer: This article is not and cannot replace legal advice.
