The SME solution to the
EU Pay Transparency Directive.
Robust, pragmatic and with added value.

Pre-project - inventory and check of your personnel policy ​  

1. The basis for meeting the requirements of the EU Pay Transparency Directive is usable documentation of the positions in the company. Job descriptions, role profiles or other descriptions of information on positions in the company must be complete, up-to-date and meaningful. 
   
   In brief 
   Is there any job-related documentation? Is everything available? Check! 
   Nothing available yet or not complete? There is not much time left! Schedule this task or leave it to an accredited COMPETO consultant.
   
   
2. We check your remuneration policy for consistency and logic so that cases of discrimination can be excluded or dealt with. Which salary components (fixed and  variable) do you use? Do these apply to all employees or are they clearly intended for certain groups (e.g. company car for field staff)? What fringe benefits do   you offer? Can everyone benefit from them? What mechanisms do you use for salary adjustments? You must be able to present objective, gender-neutral and non- discriminatory arguments.
   
   In brief
   Do you apply a collective agreement? Is it applied to all employees? If you are guided by external benchmarks, have a consistent and logical remuneration policy and can rule out gender-based discrimination, you will probably have little trouble meeting the requirements of the directive.
   
   Are salaries negotiated individually? Is salary progression performance-related without objective criteria being documented? Do you apply the famous “lord of the manor” approach to remuneration? Are there breaks in consistency or different approaches? Then you should urgently define a systematic remuneration policy together with an accredited COMPETO consultant and strictly follow a binding implementation plan.
   
   
   
3. Finally, we examine your organizational structure and its principles. Do you have a comprehensible job architecture? What is that? A systematic approach to the relationships between the individual positions in the company (division of labor) and the structuring of activities in the context of value creation and the required knowledge and skills. The existence of so-called job families is also checked. These are jobs with similar tasks, objectives and/or characteristics (e.g. management positions, specialist functions or project positions). The job families generally range from simple to complex in terms of requirements, the amount and type of knowledge required and the importance of the respective objectives.
   
   In brief
   You need a coherent job architecture that is in line with your organizational structure, your strategy and your business model.
   
   Do you need to develop and establish a comprehensible and rule-based job architecture? Rely on the support of an accredited COMPETO consultant for implementation.
   
   The preparatory work and requirements for compliance with the EU Pay Transparency Directive are now in place.

Works or staff councils

The word transparency is included in the name of the EU directive and, in fact, full openness and transparency about remuneration rules, bandwidths and the system of remuneration levels is required by the legislator. For many companies, these requirements represent completely new territory. At the same time, data protection regulations must of course be complied with. 

COMPETO FairValue urgently recommends that all companies take the necessary measures now to establish transparency at an early stage by means of co-determination and to “reveal the cards”. You will have no alternative later anyway. 

We recommend the early involvement of co-determination bodies in the preparatory work as well as in the systematic approach in order to identify potential discrimination and prevent damage to the company's image and/or financial loss. 

COMPETO provides support in explaining the individual, necessary steps to the committees, allaying fears and achieving the greatest possible involvement of the co-determination bodies. In this way, you can use co-determination as an internal multiplier and proactively settle the understandable excitement of the workforce on the subject.

A number of companies even form committees of cross-departmental representatives and members of staff and works councils for the necessary job evaluation in order to take this step together with full transparency.

Find a suitable solution together with one of our accredited COMPETO consultants.

Companies bound by collective agreements and users of non-binding collective agreements

Do you apply a collective agreement? In such cases, the pay ranges covered by collective agreements and those not covered by collective agreements must be carefully differentiated. We have found that the differentiation between higher-pay-scale positions and the lower-pay-scale area of non-tariff employees is often not consistently regulated, and overlaps exist, especially after the integration of different areas or companies.

An assessment is carried out in the project in consultation with one of our accredited COMPETO consultants.

Company agreements and company regulations

In the event of co-determination at company level, existing company agreements on remuneration systems and job architectures should be checked for compliance with the provisions of the EU Pay Transparency Directive and, if necessary, renegotiated and adapted. In all other cases, company regulations on remuneration issues and job management must be reviewed and, if necessary, adapted. The directive clearly states that employers must inform employees of their right to information on remuneration issues at least once a year! If your company does not yet have any company agreements or company regulations, we advise you to start as soon as possible. Your accredited COMPETO advisors will discuss this topic individually on a case-by-case basis. 

Competence-based job evaluation according to analytical methodology

This is not about the acting job holders who hold a position and not about measuring or assessing performance, aptitude and inclination. It is about evaluating the requirements and the expected results of the individual positions within the framework of the division of labor in a company, completely independently of the respective persons.

COMPETO FairValue has created a pragmatic, comprehensible and robust solution especially for SMEs that offers three different methodological alternatives. Together with an accredited COMPETO consultant, you select the appropriate approach and implement the job evaluation. 

1. The analytical job evaluation 

   This methodology is applicable to all organizations and all sectors. There are five evaluation criteria, each with seven levels of severity. This is enough differentiation to evaluate all positions in medium-sized companies. 

   A simple scoring principle quickly leads to a comprehensible result for all included positions.

2. The competence-based method

   This method is particularly suitable for companies with strong knowledge requirements, e.g. chamber professions, agencies or consulting companies. Classically positioned companies with strong in-house value creation and production are not suitable for this method. The assessment is based on five different competency criteria, each with seven levels. This is sufficient differentiation to evaluate all positions in medium-sized companies.

   A simple scoring principle quickly leads to a comprehensible result for all positions included.

3. The job family method

   Medium-sized companies that already have a defined job architecture and companies that have many similar positions can use the methodology based on job families. This involves identifying different requirement characteristics and degrees of difficulty in achieving objectives. The individual families are then structured according to complexity, e.g. junior position, middle position, senior position. With the support of an accredited COMPETO consultant, the job families are designed and assessed on a company-specific basis.

   The assessment and classification is carried out using a total of seven levels. These allow sufficient differentiation to evaluate all positions in medium-sized companies.

4. The mixed method

   Under certain circumstances, it can make sense to use two or all three evaluation methods in parallel for job evaluation. For example, the research and development department could be evaluated using the competency-based approach, the job family method may be used for the sales department and all other positions are evaluated using the analytical method. All three alternatives each have seven degrees of proficiency, so that the assessment results are directly comparable.

   The following applies to all methods without exception: the requirements for the positions are assessed, not the performance and qualifications of the respective employees!

It is recommended to start the evaluation process with key positions. For this purpose, approx. 10 - 15 % of the positions that are typical for the character of the company, the industry or the business model are selected from the total number of positions in the company. The key positions are discussed in detail and evaluated individually according to the methods offered. The key positions are used as anchors to evaluate the other positions in the company according to relative standards in relation to the anchor positions. In this way, the evaluation process is faster, easier to understand and more efficient.

Evaluation-based organization chart

To make equal and equivalent jobs visible, the evaluation results are displayed across companies. Departments, job families or common characteristics of jobs can be used as subdivisions. This makes it possible to directly compare positions from different departments or company divisions, which is important for the subsequent proof of discrimination cases. 

The method of cross-comparison is also suitable for groups of companies that belong to a common parent company. Legal units or branches in Germany and abroad can be compared with each other and can use a common job architecture as a platform. 

Our accredited COMPETO consultants support the creation of cross-comparisons and helpful overviews. 

Grading - functional value groups in action

Functional value groups, also known as grades in HR jargon, are subdivisions in the ranking of evaluated jobs that distinguish simpler, less complex jobs from the next higher group with increased requirements and complexity. According to the COMPETO model for SMEs, there are a total of seven function value groups, which do not necessarily have to be occupied in all cases. 

Companies with very flat hierarchies are predicted to have fewer differentiations in terms of requirements than organizations with deeper hierarchies. The function value groups are not only extremely important for the requirements of the Pay Transparency Directive, but as part of the job architecture they also serve as the backbone of a company's HR policy, e.g., for succession planning, personnel development, career paths and salary management.

Recording of salary components

The project to date has focused exclusively on company structures, job requirements and systematic job architecture. 

From this project step onwards, the actual salaries and fringe benefits of all employees for all positions (except for executive bodies such as management and board members) are recorded for each grade. It is not necessary to pass on personal data to the COMPETO consultants. Only anonymized data is recorded. The procedure is agreed in advance between the respective HR department and an accredited COMPETO consultant to consistently comply with data protection regulations.

The national law implementing the EU Pay Transparency Directive is not yet in force, so the scope and level of detail of the pay components to be analyzed has not yet been determined. However, the directive stipulates that 1) basic salaries and fixed payments, 2) variable remuneration components and 3) valuable fringe benefits such as retirement benefits, pension entitlements, company cars, etc. are to be included in the analysis. 

Salaries are recorded according to the characteristics of the job evaluation/grade of the position, the gender of the employee and the amount of the respective remuneration components and are processed in the COMPETO FairValue IT solution with the highest standards of data protection regulations and data security. The results are only available to the company in accordance with the respective authorization concepts. Our accredited COMPETO consultants are only granted usage and reading rights for the duration of the project.

Salary bands for a systematic salary policy

Regression analyses are used to determine the individual salaries for each grade. Depending on the spread and differentiation of salaries, a median is calculated as an arithmetic mean. Starting from the median, salary bands with an upward and downward spread are determined for each grade. The range of +/- 20 %, which has been used as a benchmark for many years, is supplemented by the spread of +/- 5 % required by the guideline. 

This analysis is then repeated by showing positions with female employees and separately from male employees to identify potential suspected discrimination. How non-binary employees are dealt with will only be determined once a national implementation law has been presented.

Identification of risks of discrimination

By systematically applying a job architecture based on grades, job families and careers in direct connection with the salary bands per grade, it is now possible to identify the high and low points of individual persons, separated by gender. The points identified represent possible risks and could possibly indicate cases of discrimination - but they do not have to! 

The following applies: the greater the difference between high and low positions, the greater the risk of possible additional payments and official penalties in recognized cases of discrimination. 

COMPETO's IT solution uses a heat map with different risk classes to visually identify the potential risks.

Avoidance of penalties, sanctions and reputational damage

For every potential case of discrimination, a historical investigation of the circumstances should be carried out based on personnel files and other evidence. The employer has the sole burden of proof that it is not a matter of gender-related or arbitrary differences in remuneration, but rather of systematically verifiable and objectively justifiable deviations. Evidence is particularly difficult to find in the case of very long-serving employees or in the case of company takeovers. The analysis is usually carried out in cooperation with the HR department, the company management and the COMPETO consultants. As the latter may not have access to the personal data and files, careful preparation by the HR department is essential. If a co-determination body exists, it should and must be included in the considerations. As a result, the overall risk for the company is shown and commented on so that the corresponding adjustments to minimize the risk can be started immediately. On request, we can provide support in clarifying which measures are necessary to meet the requirements and minimize legal and financial risks.

Complaints management

Information on processes and templates can only be provided on this point once a national implementation law has been submitted. 

Duty to provide information and report

Information on processes and templates can only be provided on this point once a national implementation law has been submitted.