Pay differences between women and men performing equal work or work of equal value are not automatically unlawful, but the employer should be able to justify them using objective, gender-neutral criteria that are relevant to the work or pay decision and applied consistently. Directive (EU) 2023/970 does not provide a closed list of automatically acceptable reasons. Depending on the facts, relevant experience, demonstrated performance, additional skills, responsibility, working conditions, location or another legitimate factor may help explain a difference. The employer still needs evidence showing how the factor was measured and why it explains the actual pay outcome.
Jurisdiction: European Union
Objective and Gender-Neutral Are the Core Tests
The Pay Transparency Directive repeatedly distinguishes justified and unjustified pay differences by reference to objective, gender-neutral criteria. That means an employer should be able to point to a factor that is genuinely relevant to the role, worker or pay decision and that does not depend directly or indirectly on sex. A reason should be more than a label. It should explain why one worker receives more than another and should be capable of being applied consistently to comparable workers.
The Directive Does Not Give a Closed List of Valid Reasons
There is no universal EU checklist stating that a particular factor always justifies higher pay. A criterion that is legitimate in one context may be irrelevant in another. Relevant experience may matter where it materially improves performance in the role, while a location differential may matter where the employer has a documented geographic pay policy. Employers should therefore avoid assuming that familiar compensation labels are automatically lawful. The strength of a justification depends on the facts, the evidence and the consistency of application.
Experience, Skills and Performance Need a Real Connection to Pay
Experience, additional skills and performance are common explanations for pay differences, but they should be connected to the actual role and pay decision. Years of service alone may be a weak explanation if the extra experience has no meaningful relevance to the job. Performance should be supported by a defined and consistently applied process rather than subjective manager preference. Additional skills should be identifiable and relevant. The more structured the criterion, the easier it is to show that the pay difference is not sex-based.
Responsibility, Working Conditions and Location Can Also Matter
Differences in responsibility, working conditions or geographic circumstances can also affect pay where they reflect genuine job-related differences. A worker may manage a larger budget, carry regulatory accountability, work in materially more difficult conditions or fall under a documented geographic pay framework. The employer should still be able to identify the factor precisely and show that comparable workers are treated consistently when the same circumstances arise.
Historical Pay and Negotiation Are Weak Standalone Explanations
An unexplained historic salary difference does not become objective merely because it has existed for years. The same caution applies to statements that one worker negotiated better or was paid more because of a previous salary. Those explanations may reproduce earlier inequality rather than justify the current difference. Employers should examine the current, objective basis for the pay outcome and whether the same pay-setting logic would be applied to a worker of another sex in a comparable situation.
Article 10 Makes the Evidence Question Operational
Article 10 requires a joint pay assessment in specified circumstances where reporting reveals an average pay difference of at least 5 percent in a category of workers, the difference has not been justified by objective, gender-neutral criteria and it has not been remedied within six months. The assessment must include the reasons for pay differences, where they exist. This makes documentation practical rather than theoretical: an employer may need to show workers' representatives, equality bodies or labour authorities why a difference exists and what evidence supports it.
Frequently Asked Questions
Can experience justify a pay difference?
Potentially yes, where the experience is relevant to the role, genuinely explains the pay outcome and the criterion is applied consistently and gender-neutrally.
Can performance justify different pay?
Potentially, but the employer should be able to show a defined, evidence-based performance process rather than relying on unsupported discretion.
Is previous salary an objective justification?
It should not be treated as an automatic justification because it can reproduce historical pay inequality. The employer should identify a current, objective and gender-neutral basis for the difference.
Does the Directive list every acceptable reason?
No. It requires objective, gender-neutral criteria but does not provide a closed list of automatically valid reasons.
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.