The EU Pay Transparency Directive as a solution for SMEs.
Robust, pragmatic and with added value.

Pre-Project: Review of Your Job Architecture and HR Policies

1. Laying the groundwork with job documentation
   
   Meeting the requirements of the EU Pay Transparency Directive starts with solid documentation of every position in your company. Job descriptions, role profiles, and other position-related records need to be complete, up to date, and meaningful.
   
   The quick check: Do you have job-related documentation in place? Is everything available and current? Great – you’re on track. If documentation is incomplete or missing altogether, time is running short. Plan for this now or bring in an accredited COMPETO consultant to handle it.
   
   
2. Reviewing your compensation policy
   
   We conduct a structured review of your compensation policy, checking for consistency and logic to uncover discrepancies and prevent discrimination. Which salary components – fixed and variable – do you use? Do they apply to all employees, or are they clearly designated for specific groups (for example, company cars for field staff)? What fringe benefits do you offer, and can everyone access them? What mechanisms drive salary adjustments? You need to be able to present objective, gender-neutral reasoning for every pay decision so stock om facts.
   
   The quick check: Do you follow a collective bargaining agreement that covers all employees? Do you rely on external benchmarks and maintain a consistent, logical pay policy while ruling out gender-based discrimination? If so, the structural adjustments ahead will likely be manageable.
   
   Are salaries negotiated on a case-by-case basis? Are raises performance-related without documented objective criteria? Is pay set informally – the classic “lord of the manor” approach? Are there inconsistencies or different approaches across teams or departments? If any of this sounds familiar, you should work with an accredited COMPETO consultant to define a systematic compensation policy and commit to a clear implementation plan.
   
   
3. Examining your organizational structure
   
   Finally, we look at your organizational structure and its underlying principles. Do you have a clear job architecture? This means a systematic framework that maps out how positions relate to one another – the division of labor, the structuring of activities within your value chain, and the knowledge and skills required. We also check for the existence of job families: groups of positions with similar tasks, objectives, or characteristics (for example, management roles, specialist functions, or project positions). Job families typically range from simple to complex in terms of requirements, the depth of knowledge needed, and the significance of their objectives.
   
   The quick check: You need a coherent job architecture that aligns with your organizational structure, your strategy, and your business model. If you need to develop and establish one, an accredited COMPETO consultant can guide you through the implementation.
   
   With this, the preparatory work and prerequisites are complete.

Works Councils and Staff Councils

The word “transparency” is right there in the name of the directive – and it means exactly that. Full openness about pay rules, salary ranges, and the system behind compensation levels is what the directive calls for. For many companies, this represents entirely new territory. At the same time, data protection requirements must of course be respected. 

For any questions involving legal requirements, COMPETO FairValue recommends that companies consult qualified legal counsel. We cooperate with established law firms for this purpose. In the meantime, take the necessary steps now to create transparency with your employee representatives early on. Later, you won’t have a choice. 

We recommend involving employee representation bodies early in the process – both in the preparatory work and in the structured approach to identifying potential pay gaps. COMPETO provides methodological support in explaining the individual steps to these bodies, addressing concerns, and achieving broad participation. This way, employee representation becomes an internal multiplier, and you can proactively address the understandable questions your workforce will have. 

Some companies even form cross-departmental committees that include members of works or staff councils for the job evaluation process, ensuring full transparency every step of the way.

Work together with one of our accredited COMPETO consultants to find the right approach for your organization.

Companies Using Collective Agreements

Does your company stick to a collective bargaining agreement? If so, pay ranges covered by collective agreements and those outside the agreement need to be carefully separated. In our experience, the boundaries between higher-level positions under collective agreements and lower-level non-bargaining groups are often unclear and tend to overlap. This inconsistency frequently arises after mergers or the integration of different business units.

A structured, method-based analysis is carried out as part of the project, in close coordination with an accredited COMPETO consultant.

 

Company Agreements and Workplace Policies

Where employee co-determination exists, any existing company agreements on pay systems and job structures should be thoroughly reviewed and, if necessary, renegotiated and updated. For questions of a legal nature, we cooperate with established law firms. In all other cases, workplace policies on compensation and position management must be reviewed and potentially adjusted. 

Adjustments are expected as the directive takes effect. These include new information rights and disclosure obligations related to pay, as well as future reporting requirements. If your company does not yet have formal workplace agreements or policies in place, we encourage you to start developing them as soon as possible. Your accredited COMPETO consultants will discuss this on a case-by-case basis, involving qualified legal advisors where needed.

Competency-Based Job Evaluations Using Analytical Methods

An important clarification upfront: this is not about the individuals who hold a position, and it is not about measuring personal performance, aptitude, or preferences. Job evaluation focuses on the requirements and expected outcomes of each position within the company’s division of labor – completely independent of the people currently in those roles.

COMPETO FairValue has developed a pragmatic, easy-to-follow, and robust solution specifically for mid-sized companies, offering three distinct methodological approaches. Together with an accredited COMPETO consultant, you will select the approach that fits your organization best and implement the job evaluation. 

1. The Analytical Job Evaluation

   This method works across all industries and organization types. It uses five evaluation criteria, each with seven levels of complexity – enough differentiation to evaluate every position in a mid-sized company. A straightforward scoring system produces clear, easy-to-understand results for all positions included. 

2. The Competency-Based Method

   This approach is especially well suited for knowledge-based organizations – for example, professional services firms, agencies, or consulting companies. It is less appropriate for companies with a strong focus on in-house manufacturing and production. The evaluation is based on five competency criteria, each with seven levels. Again, a simple scoring system delivers clear, traceable results.

3. The Job Family Method

   This method is ideal for mid-sized companies that already have a defined job architecture or that have many similar positions. It involves the identification of different profiles according to job requirements as well as levels of difficulty. Individual job families are then structured by complexity – for example, junior, mid-level, and senior positions. With the support of an accredited COMPETO consultant, job families are tailored and evaluated on a company-specific basis. The evaluation uses seven levels, providing sufficient differentiation for mid-sized organizations.

4. The Mixed Method

   In some cases, it makes sense to combine two or all three approaches. For example, R&D might be evaluated using the competency-based method, sales using the job family method, and all other positions using the analytical approach. Since all three alternatives use seven levels of complexity, the results are directly comparable.

   Key principle: Across all methods, only the requirements of the position are evaluated – never the performance or qualifications of individual employees.

We recommend starting the evaluation with anchor positions – roughly 10–15% of all positions, selected because they are typical of the company, the industry, or the business model. These anchor positions are discussed in detail and evaluated individually. They then serve as reference points for evaluating the remaining positions on a relative basis, making the overall process faster, more transparent, and more efficient.

Evaluation-Based Organizational Overview

To make equal and equivalent positions visible, evaluation results are displayed across the entire organization. Departments, job families, or shared characteristics can serve as the organizing principle. This enables direct comparability and highlights deviations between equivalent positions for deeper analysis. 

The cross-comparison method also works well for corporate groups under a common parent company. Legal entities or branches – domestically or internationally – can be compared with one another and can share a unified job architecture as a common platform. 

Our accredited COMPETO consultants support the creation of cross-comparisons and clear, actionable overviews. 

 

Functional Value Groups in Action

Functional value groups – commonly known as grades in HR terminology – are subdivisions in the ranking of evaluated positions. Simpler, less complex positions differ from the next higher group through increased requirements and complexity. The COMPETO model for mid-sized companies includes a default model with seven grades, though not all of them need to be filled in every case. 

Companies with very flat hierarchies will typically have fewer requirement differentiations than organizations with deeper structures. The grades are not only central to meeting the requirements of the Pay Transparency Directive – as part of the job architecture, they also serve as the backbone of a company’s HR policy, supporting succession planning, talent development, career paths, and salary management.

 

Documentation of Compensation Components

Up to this point, the project has focused entirely on company structures, position requirements, and systematic job architecture. 

From this step onward, we record the actual salaries and fringe benefits of all employees for every position (except executive bodies such as managing directors and board members), broken down by grade. It is not necessary to share personal data with COMPETO consultants. Only anonymized or pseudonymized data is collected. The exact procedure is agreed upon in advance between your HR department and an accredited COMPETO consultant to ensure consistent adherence to data protection standards.

Depending in detail on national legislation implementing the EU Pay Transparency Directive, the directive envisions that three categories are included: (1) base salaries and fixed payments, (2) variable compensation components, and (3) monetary benefits in the form of fringe benefits. 

Salary data is recorded according to the respective job evaluation grade of each position, the gender of the employee, and the amount of each compensation component. This data is processed in the COMPETO FairValue IT platform (COMPETO Insight), which applies the highest standards of data protection and data security. Results are accessible only to the company itself, in line with its authorization framework. Our accredited COMPETO consultants receive limited access rights – for viewing and use only – for the duration of the project.

 

Salary Bands for a Systematic Compensation Policy

Using regression analysis, individual salaries are mapped for each grade. Depending on the spread and differentiation of salaries, a median is calculated. Starting from this median, salary bands with an upward and downward range are determined for each grade. The calculation of salary bands and ranges is supported by accredited COMPETO consultants.

This analysis is then repeated separately for positions held by female employees and those held by non-female employees. This creates statistical transparency around gender-specific pay differences. How non-binary employees will be categorized will be determined once the national legislation is finalized.

 

Statistical Analyses and Heat Map

The job architecture, combined with grades, job families, career paths, and salary bands, allows us to draw conclusions about deviations in individual compensation. Through systematic statistical analysis, outliers in individual employee pay – separated by gender – are identified. These data points represent potential risks and may indicate possible discrimination – but they don’t necessarily do so.

The general rule: the larger the statistically proven gap between high and low positions, the greater the risk of potential back-pay obligations and official penalties in confirmed cases of discrimination

COMPETO’s IT solution, COMPETO Insight, uses a heat map with different risk categories to visually highlight potential risks.

 

Avoiding Penalties, Sanctions, and Reputational Damage

For every potential case of discrimination, we recommend investigating the root causes based on personnel files and other evidence. Given the reversal of the burden of proof under the directive, employers should build transparent documentation of historical pay decisions into their internal processes to ensure that past decisions can be traced and explained. This can be particularly challenging for very long-tenured employees or in cases involving company acquisitions.

The methodological analysis is typically carried out in collaboration with your HR department, company management, and the COMPETO consultants. Where legal questions arise, qualified legal advisors are brought in. Since these advisors may not have direct access to personnel data and files, careful preparation by the HR department is essential.

If an employee representation body exists, it should – and must – be involved in these deliberations. As a result, the overall risk picture for the company is presented and assessed so that the corresponding adjustments to minimize risk can start immediately. On request, we can provide support in determining which measures are needed to meet the directive’s requirements and to reduce structural and financial exposure.

For any matters involving legal risk, we recommend that companies seek qualified legal advice. We cooperate with established law firms for this purpose.

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.