A joint pay assessment should review variable compensation where bonuses, commissions, incentives, premiums or other complementary or variable components contribute to the pay difference between female and male workers in an affected category. The review should compare who is eligible, who actually receives awards, what opportunities and targets workers receive, how performance is measured, how much discretion managers exercise and whether award values differ. Article 9 already requires separate reporting on variable-pay gaps and recipient proportions, while Article 10 requires employers and workers' representatives to identify the reasons for unjustified pay differences and take corrective measures.
Jurisdiction: European Union
Start With the Variable-Pay Metrics Already Reported
Article 9 requires employers in scope to report the gender pay gap and median gender pay gap in complementary or variable components, together with the proportion of female and male workers receiving those components. Those measures provide an early signal for the joint pay assessment. Employers should connect the organisation-level reporting data to the affected category of workers and determine whether variable pay is materially contributing to the category-level difference that triggered further analysis.
Compare Eligibility and Access to Opportunities
A variable-pay review should first test whether female and male workers in the same category have equal access to the mechanisms that generate additional pay. Relevant questions include who is eligible for a bonus plan, who receives sales territories or revenue opportunities, who is offered overtime or premium shifts, who can participate in long-term incentives and whether leave, part-time work or flexible arrangements affect access. Differences may be justified in some cases, but the criteria should be objective, gender neutral and consistently applied.
Review Targets, Performance Measures and Manager Discretion
Even where eligibility is formally equal, award outcomes can diverge because targets, performance ratings or managerial discretion operate differently in practice. Employers should compare how targets are set, whether they depend on opportunities outside the worker's control, how subjective ratings are calibrated and how exceptions are approved. Broad discretion is not automatically unlawful, but unexplained or inconsistently applied discretion can make it difficult to justify a gender-linked difference on objective, gender-neutral grounds.
Separate Award Frequency From Award Value
A useful review distinguishes between whether workers receive variable pay at all and how much they receive when an award is made. Female and male workers might have similar participation rates but different average award values, or the reverse. Looking at both dimensions helps isolate the source of the difference. Employers should also examine whether award caps, accelerators, thresholds or discretionary adjustments operate consistently within the affected worker category.
Trace Variable-Pay Findings Back to the Root Cause
The objective of the joint pay assessment is not to produce another set of statistics but to identify the reasons for the difference. Where variable compensation contributes to the gap, the employer and workers' representatives should establish whether the cause lies in plan eligibility, opportunity allocation, target setting, rating practices, award formulas or discretionary decisions. The explanation should be supported by evidence and tested against objective, gender-neutral criteria rather than assumed from the existence of a compensation policy.
Remediate Both Individual Outcomes and Plan Design Where Needed
If the assessment identifies unjustified variable-pay differences, corrective action may need to address both past worker outcomes and the design of the compensation system that produced them. Measures can include individual corrections, revised eligibility rules, standardised target-setting, stronger calibration, documented approval controls or reduced discretionary variation. Article 10 requires unjustified differences to be remedied in close cooperation with workers' representatives within a reasonable period, subject to national law or practice.
Frequently Asked Questions
Does a variable-pay gender gap automatically prove discrimination?
No. It is a signal for investigation. The employer should determine whether the difference is supported by objective, gender-neutral criteria and remedy unjustified differences.
What should a variable compensation review examine?
It should examine eligibility, access to opportunities, target setting, performance measures, discretion, award frequency and award value.
Can remediation require changing a bonus plan?
Yes. If the plan design or administration contributes to unjustified pay differences, structural changes may be needed as well as individual corrections.
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.