Benefits can matter in an equal-pay comparison, but they should not be confused with the test for whether two jobs are work of equal value. Directive (EU) 2023/970 defines pay broadly to include employment-related consideration received in cash or in kind, so benefits can form part of the remuneration being compared. Article 4 addresses work of equal value through objective and gender-neutral criteria, including skills, effort, responsibility and working conditions. The correct sequence is therefore to identify comparable work using job-value criteria and then examine the remuneration package, including relevant benefits, to determine whether comparable workers receive equal pay or whether differences require explanation.
Jurisdiction: European Union
Benefits Can Form Part of Pay Under Article 3
Directive (EU) 2023/970 uses a broader concept of pay than base salary alone. Article 3 includes the ordinary basic or minimum wage or salary and other consideration received directly or indirectly from the employer in respect of employment, whether in cash or in kind. Recital 21 confirms that complementary or variable components and employment-related benefits should be taken into account. This means a pay-equity review may need to consider benefits alongside salary, bonuses and other remuneration. The exact treatment of a particular benefit can depend on its structure and applicable national law, but employers should not assume that an item is outside equal-pay analysis simply because it is not paid through the normal salary field.
Work of Equal Value Is a Job-Value Question
The question of whether two jobs are work of equal value is different from the question of how much the workers receive. Article 4 requires Member States to ensure that pay structures allow an assessment of whether workers are in a comparable situation with regard to the value of work. The Directive points to objective and gender-neutral criteria, including skills, effort, responsibility and working conditions. Those factors describe the value of the work itself. They are not replaced by the value of a company car, pension contribution, health benefit or other reward. An employer should therefore establish comparable work independently before using the compensation package to test equal pay.
Benefits Are Analysed After the Comparison Group Is Established
Once the employer has identified workers doing the same work or work of equal value, the remuneration comparison can extend beyond salary. The analysis can ask whether workers in the relevant category receive the same benefit eligibility, employer contribution, allowance, vehicle entitlement, insurance level or other material reward. Differences are not automatically unlawful, but they should be explainable by objective factors that are unrelated to sex and consistent with the applicable legal framework. Keeping this sequence clear avoids a circular approach in which workers are treated as non-comparable merely because their benefits already differ.
Benefit Eligibility Can Create Hidden Pay Differences
A benefit gap can arise even when the nominal salary is the same. One group may have greater access to a pension contribution, company vehicle, insurance plan, meal allowance, travel facility or another employer-funded benefit. Eligibility may depend on grade, role, location, working pattern or contractual status. Those rules can be legitimate, but they should be documented and tested within appropriate worker categories. Employers should pay particular attention to inherited policies and discretionary exceptions because they can create durable differences that are difficult to see in a basic salary comparison. A total-reward inventory helps identify which benefits are material enough to include in the review.
Non-Cash Benefits Need a Defensible Valuation Method
Comparing non-cash benefits requires more judgement than comparing fixed salary. Employers should document how a benefit is valued, the period to which the value relates and whether the methodology is applied consistently to comparable workers. Depending on the purpose of the analysis, possible measures may include employer cost, a standard benefit value or another method supported by applicable national rules. The Directive does not prescribe one universal valuation formula for every benefit. The important control is that the employer can explain what was included, why it was included and how the value was derived. Tax valuation should not automatically be assumed to be the only correct pay-equity measure unless national rules require that approach.
Job Evaluation and Reward Analysis Should Have Separate Evidence Trails
A robust process keeps two evidence trails. The first supports the work-of-equal-value assessment through job descriptions, evaluation factors, scoring records, classification rules and review decisions. The second supports the remuneration comparison through salary records, benefit eligibility, employer contributions, plan documents and valuation methodology. Separating these records makes the analysis easier to reproduce and reduces the risk that reward differences influence the job evaluation itself. It also helps employers explain whether a difference arose because jobs are genuinely different in value, because benefit rules use an objective criterion, or because an unexplained pay difference remains and needs further review.
Frequently Asked Questions
Do employee benefits count when comparing equal pay?
They can. Article 3 defines pay broadly enough to include employment-related cash and in-kind consideration, so relevant benefits may form part of the remuneration comparison.
Do benefits determine whether two jobs are work of equal value?
No. Work of equal value should be assessed using objective gender-neutral job-value criteria such as skills, effort, responsibility and working conditions. Benefits are then examined as part of remuneration.
Must every benefit be converted into one monetary value?
The Directive does not prescribe one universal valuation method for every benefit. Employers should use a documented, consistent method appropriate to the benefit, the analysis and applicable national rules.
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Official Sources
Requirements and practices differ by jurisdiction and organisation. Check current local law, official guidance and professional advice for a specific situation.