Pay Transparency in Practice: A Useful Method for Comparing the Value of Different Jobs

Although more and more people are becoming familiar with the Pay Transparency Directive, which is expected to apply from 7 June 2026, it is also worth understanding the practical methods that enable different jobs to be compared in a meaningful and objective manner. Guidance in this respect can be found in the methodology developed by the Court of Justice of the European Union (CJEU) and national courts over recent years.

The EU Pay Transparency Directive adopted in 2023 establishes minimum requirements for employers. However, the Hungarian implementing legislation, which has not yet been adopted, may introduce even stricter requirements. Companies that do not begin adapting their HR systems in good time may later be forced to comply with the new requirements under considerable time pressure.

Establish a job classification system in which employees performing work of equal value are assigned to the same grade!

Under the Pay Transparency Directive, employers are required to establish a job classification system in which employees performing work of equal value are assigned to the same grade. A single grade may encompass different jobs and positions, and each grade must be associated with transparent pay ranges. The concept of remuneration is not limited to base salary; it also covers all additional forms of remuneration and benefits, including bonuses, overtime pay, travel benefits, and other benefits in kind.df.

Objective and Gender-Neutral Criteria for Designing a Pay Structure

The pay structure must enable an assessment of whether employees are in a comparable situation based on objective and gender-neutral criteria. According to the EU guidance, particularly for small and medium-sized enterprises (SMEs), four key factors should be assessed: the skills required, the effort involved, the level of responsibility, and the working conditions. These are generally applicable criteria and are not industry-specific.

Employers must assign appropriate weight to these factors according to their relevance for the specific job. Where justified, additional criteria may also be taken into account. It is important that the system is not based on a single criterion, as the less detailed the assessment framework is, the more difficult it becomes to carry out an objective comparison. The assessment must remain objective and impartial: managers’ subjective judgments must not influence the outcome, even where certain jobs have traditionally been regarded as being of greater value.

A good example of a detailed assessment framework is provided by the litigation brought against the clothing retailer Next, in which more than 3,500 women employed in retail sales roles claimed that they were unjustifiably paid less than male employees working in warehouse roles.

The court was required to determine whether the retail sales and warehouse roles were of equal value. In carrying out its assessment, it considered a wide range of factors, including the knowledge and skills required, planning and organisational responsibilities, responsibility for equipment and safety, communication and customer relations, training responsibilities, as well as the mental and physical demands of the job and the working conditions. For each factor, defined assessment levels and corresponding scores were established, and on that basis the two roles were found to be of equal value. The court held that the company had unlawfully paid higher wages to warehouse employees and ordered it to amend its pay policy and pay approximately £30 million in back pay (approximately HUF 13 billion) to the female employees.

This case illustrates the significant financial and reputational risks that such cases may entail.

Dr. Nóra Rácz, partner and director of LeitnerLeitner;     Diána Elek, manager at LeitnerLeitner

The Burden of Proof lies with the Employer

It is important to emphasise, however, that pay differences may still exist within the same grade. For example, objectively measurable differences in an employee’s performance may justify differences in remuneration. However, the employer bears the burden of proving that such differences are justified, based on documented and objective criteria. It is therefore advisable to review the existing organisational and remuneration structure now and to define the relevant grades together with the corresponding pay ranges.

The Serious Consequences of Discrimination.

Employees may be entitled to compensation for up to three years retrospectively, with the purpose of restoring their position to what it would have been had the infringement not occurred. The amount of compensation is not subject to any upper limit. In addition, employers may face fines, the amount of which has not yet been specified in Hungarian legislation. However, under EU requirements, sanctions must be proportionate, effective and dissuasive.

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