Broadbanding uses a smaller number of wide salary bands, while narrow salary grades use more levels with tighter pay ranges. Broadbanding can provide flexibility for career growth and specialist pay without frequent regrading, but it can also create larger differences within one band and therefore needs strong placement and progression rules. Narrow grades create clearer boundaries and promotion points, but they can become rigid and encourage frequent grade changes. Directive (EU) 2023/970 does not require either structure. The legal focus is whether the pay structure supports equal pay for equal work or work of equal value and whether pay-setting and progression criteria are objective, gender neutral and accessible to workers.
Jurisdiction: European Union
Broadbanding Uses Fewer and Wider Pay Bands
Broadbanding simplifies a pay structure by grouping a wider range of jobs, career stages or pay opportunities into a smaller number of broad bands. Instead of moving through many tightly separated grades, employees may remain within one band while their expertise, contribution or market position develops. This can reduce the administrative effort associated with frequent regrading and can work well where careers are not built around rigid hierarchical steps. The trade-off is that a broad band can contain a large spread of salaries. Employers therefore need clear criteria explaining why one worker is placed toward the bottom and another toward the top of the same band.
Narrow Grades Create More Distinct Pay Levels
A narrow-grade structure uses more pay grades with smaller ranges. Each grade is intended to represent a relatively defined level of job value, responsibility or career scope. Employees may progress through the range until a material change in role justifies promotion to the next grade. This creates clearer boundaries and can make promotion decisions easier to communicate. It can also reduce the range of manager discretion within each grade. The weakness is that a highly granular structure can become inflexible, especially where small changes in duties trigger requests for reclassification or where employees expect a new title or grade mainly to achieve further salary growth.
Broad Bands Need Stronger Placement and Progression Rules
The wider the band, the more important the rules governing salary placement become. If employees with similar jobs can be distributed across a very wide pay range, the employer should be able to explain which objective factors account for those differences. Relevant factors may include job-related experience, skills, sustained performance, scope or another legitimate criterion that is consistently applied. A broad band without clear progression rules can recreate discretionary pay practices inside a formally structured system. Compensation teams should therefore define entry points, progression expectations, promotion triggers, maximum-pay controls and exception approvals before relying on broadbanding as a flexibility tool.
Narrow Grades Need Guardrails Against Artificial Regrading
A tightly graded structure can also create unintended incentives. Managers may seek grade changes for employees whose responsibilities have not changed materially simply because the current range offers limited salary movement. That weakens the connection between job value and grade placement. Employers should distinguish between progression within a role and genuine movement to a higher-value role. Promotion criteria should be tied to changes in responsibility, complexity, accountability or other relevant job factors rather than being used primarily as a mechanism to bypass a salary maximum. Periodic reviews can identify grades that are too narrow or job families where repeated promotions suggest the architecture no longer fits the work.
The Directive Does Not Prescribe One Grade Architecture
Article 4 of Directive (EU) 2023/970 requires pay structures that enable assessment of equal work and work of equal value using objective and gender-neutral criteria, including skills, effort, responsibility and working conditions. Article 6 requires the criteria used to determine pay, pay levels and pay progression to be easily accessible to workers and objective and gender neutral. Those provisions do not prescribe broadbanding, a specific number of grades or a standard range width. Employers therefore have design freedom, but the chosen structure must still support explainable and non-discriminatory pay decisions.
Choose the Structure That Best Supports Consistent Decisions
The strongest structure is not necessarily the one with the most grades or the broadest bands. It is the one that matches the organisation's job architecture and produces repeatable decisions. Employers should examine how much development can occur within a level, how often responsibilities materially change, how volatile market pay is, whether collective agreements constrain the structure and how easily managers can apply the rules. Whichever approach is used, the organisation should monitor salary distributions, promotion patterns, exceptions and unexplained differences between comparable workers so that flexibility does not become a substitute for governance.
Frequently Asked Questions
Is broadbanding better than traditional salary grades?
Not universally. Broadbanding offers flexibility, while narrower grades create clearer boundaries. The better design depends on job architecture, progression needs and governance capability.
Does the EU Pay Transparency Directive require salary grades?
No. It requires objective gender-neutral pay structures and pay-setting criteria, but it does not prescribe one grading model.
Can broadbanding increase pay-equity risk?
It can make large differences within one band easier to create if placement rules are weak, which is why broad bands need strong objective criteria and review controls.
Related Guides
Official Sources
Requirements and practices differ by jurisdiction and organisation. Check current local law, official guidance and professional advice for a specific situation.