• Belgium (Wallonia-Brussels Federation): Annual pay audits for all employers; simplified analyses for 50–99 employees; full wage-structure analyses every two years for ≥ 100, with remediation plans where gaps appear.
• Germany: Entgelttransparenzgesetz (2017) gives individual info rights in firms ≥ 200 employees & reporting/audits for ≥ 500.
• France: Gender Equality Index (≥ 50 employees) with five indicators; stricter rules for ≥ 250 and ≥ 1 000.
• Sweden: Annual equal-pay surveys (≥ 10 employees) & formal equality plans (≥ 25 employees); draft transposition builds on this.
• Finland: Equality Act (609/1986): employers ≥ 30 must prepare biennial gender-equality plans with pay surveys.
• Netherlands: Relies on works-council dialogue; no specific pay-transparency law (to be superseded).
• Spain: Royal Decree 902/2020 (since 2021): Pay Register for all; audits & action plans for ≥ 50.
• Ireland: Gender Pay Gap Information Act 2021: phased reporting (2022 ≥ 250; 2024 ≥ 150; 2025 ≥ 50) with mean/median gaps, quartiles, bonus metrics.
• Central/Eastern Europe (e.g. Poland, Italy, Austria etc.): General anti-discrimination laws; no standalone transparency yet.

• Scope & Thresholds: Directive applies to ≥ 100 employees (with optional 250). National thresholds range from 10 (SE) to 500 (DE), with staggered roll-outs.
• Metrics & Remediation: Directive mandates nine pay-gap metrics & joint assessment if unexplained gap > 5%. National schemes often have fewer metrics & advisory (not joint) remediation.
• Information Rights: Directive gives workers rights to comparator pay data, salary-range disclosure, and bans history inquiries. Many countries lack individual info rights or require ranges only upon request.
• Burden of Proof: Directive shifts burden to employers once a disparity is shown. National laws often still require employees to prove discrimination first.

ISCO Integration

The Directive requires pay-gap calculations “per category of worker” based on objective factors. Member States are expected to align these with national classifications (e.g. DISCO-08 in DK) mapped to ISCO-08 to ensure comparability.

CSRD Reporting

Under CSRD, large/listed companies must include pay-equity KPIs (mean/median gaps, ratio metrics) in sustainability reports. The Pay Transparency Directive’s standardized data feeds directly into CSRD disclosures, harmonizing non-financial reporting with pay-equity requirements across the EU.

• Local Entity Compliance: Each EU subsidiary must follow its host country’s transposition (no general exemption for non-EU firms).
• HR Policy Adjustments: Eliminate confidentiality clauses; ban history inquiries; publish ranges; implement employee info procedures.
• Data Collection & Reporting: Configure HRIS to gather gender, role, pay components; automate pay-gap metrics for each jurisdiction.
• Cross-Border Consistency vs. Local Specifics: Consider a global baseline meeting strictest EU rules, then tailor to local thresholds, reps, formats.
• Legal & Financial Risk: Non-compliance → fines, litigation, reputational harm; burden-shift means EU entities must justify gaps or face liability.
• Pilot for Global Policy: EU compliance can serve as testbed for pay transparency in other regions (e.g. U.S., Canada).

• Reputation & Brand: Proactive transparency = stronger employer brand & customer/investor trust.
• Talent Acquisition & Retention: Clear ranges & fair pay practices attract and retain diverse talent.
• ESG Alignment: Pay equity data enriches ESG disclosures and boosts ratings.
• Productivity & Performance: Fair compensation systems drive motivation and meritocracy.
• Legal Risk Mitigation: Early audits and remediation reduce lawsuits and enforcement costs.
• Change Driver: Use compliance to modernize pay structures, job evaluation, and HR systems.

1. Embed Transparency in Corporate Strategy: Secure executive buy-in, set gap-reduction targets, and allocate resources.
2. Conduct Pay Equity Audits Early & Often: Perform dry-runs now; fix gaps before formal reporting; make audits annual.
3. Strengthen Job Evaluation & Pay Structures: Implement gender-neutral grading and objective pay bands.
4. Improve Data & Systems: Automate metrics in HRIS; use dashboards; simulate reporting.
5. Training & Communication: Equip HR/managers for transparent pay conversations; inform employees of rights.
6. Publish Ranges & Promote Fair Hiring Globally: Go beyond minima; ban history queries worldwide; unify approach.
7. Engage Employees & Unions: Leverage joint assessments to co-create remedies and boost engagement.
8. Leverage Success Externally: Publicize pay-gap improvements in CSR/ESG materials to strengthen EVP.
9. Monitor & Adjust Continuously: Benchmark peers; adapt to evolving thresholds; treat pay equity as continuous improvement.

Ensuring equal pay for work of equal value has become a critical priority in HR and compliance, especially with new regulations in Europe. The EU Pay Transparency Directive (Directive (EU) 2023/970) requires employers to assess and report on pay equity for men and women performing the same or equivalent work. This report evaluates whether combining the International Standard Classification of Occupations (ISCO) with a company’s internal job band framework is an effective, defensible way to group jobs of equal value for compliance, ESG reporting, and practical pay-equity analysis.

Alignment with EU Requirements

• Gender-neutral Classification: EU law (TFEU Art. 157; Directive 2006/54/EC) demands equal pay for same or equivalent work. Job classification systems must be based on objective, gender-neutral criteria.
• Directive Endorsement: The Pay Transparency Directive requires “work categories” of equal value and endorses objective job evaluation/classification tools.
• ISCO’s Role: ISCO, maintained by the ILO, groups occupations by tasks and skill level, not by who performs them, thus counteracting gender stereotypes and aligning with EU legal requirements.

Defining “Equal Value”

ISCO’s hierarchical structure of skill levels and specialization aligns with legal criteria—skill, effort, responsibility, and working conditions—to define “work of equal value.” Roles sharing the same ISCO group (and internal band) can be reasonably considered equal value for pay comparisons.

Regulatory Guidance

While the Directive doesn’t mandate a specific scheme, Member States like Denmark already require gender pay statistics by ISCO categories, demonstrating real-world acceptance of ISCO for fair pay analysis.

Dual-Axis Classification

• ISCO (Function): Groups jobs by occupation and required skill.
• Internal Bands (Level): Grades roles by responsibility/seniority (e.g., Professional I, II, III; Manager; Director).

Together, they define coherent “job cohorts” (e.g., ISCO 2412 + Band 5) for precise, like-for-like pay comparisons. Modern HRIS systems can store both data points and automate grouping and analysis.

Practical Example

Company A compares “employees in the same grade and job family” globally, achieving an <1% equal pay gap—mirroring an ISCO+band approach in practice.

Pros of ISCO+Bands

• Objectivity & Neutrality: Publicly defined, gender-neutral, globally recognized.
• Global Consistency: Simplifies cross-country comparisons and ESG disclosures (e.g., CSRD/ESRS).
• Cost-Effective: Free to use vs. expensive licenses.
• Transparency: Easy to explain to unions, employees, regulators.
• Flexibility: Can overlay on existing internal evaluations.

Cons and Mitigations

• Granularity: ISCO alone may be too broad; mitigate by combining with internal bands and choosing appropriate ISCO detail level.
• Market Data Alignment: Compensation surveys often use proprietary codes; mitigate via mapping between ISCO and survey roles.
• Perceived Rigidity: Stakeholder buy-in required; mitigate through training and inclusive review processes.
• Cross-Occupation Comparisons: Ensure internal bands allow comparison of equal-value jobs across different ISCO codes.
• Data Privacy: Small cohorts risk revealing individuals; mitigate by enforcing minimum group sizes or aggregating small categories.

Regulators & Courts

ISCO+band demonstrates an objective, documented, gender-neutral system, aligning with Directive recitals calling for job evaluation to expose indirect discrimination.

Unions & Employee Reps

Proven in Denmark, unions accept ISCO-based grouping for annual pay-gap dialogues, trusting its neutrality. Joint review with reps further enhances buy-in.

Individual Employees & Candidates

Clear classification allows straightforward responses to pay inquiries (“Your role is ISCO X, Band Y; averages are …”), building trust and supporting compliance with information-request rights.

Mitigating Challenges

• Document classification rationale and maintain an appeals process.
• Regularly audit classifications as roles evolve.

Pay Gap by Category

Directive requires reporting gender pay gap by category of worker. ISCO+bands yields precise cohorts for like-for-like gap analysis and joint pay assessments for gaps >5%.

Equal Pay vs. Overall Gap

Allows calculation of an “equal pay gap” (e.g., Company A’s <1%), distinguishing pay equity from representation issues driving overall gaps.

ESG & CSRD Reporting

• Meet ESRS S1 on equal pay for equal value.
• Streamline GRI 405-2 disclosures on pay ratios by category.
• Demonstrate SDG 5 (Gender Equality) progress with robust data.

Tracking Progress

Stable classification enables year-on-year monitoring of category-level gaps, supporting accountability and continuous improvement.

1. Misclassification: Establish governance, training, periodic audits.
2. Rigidity: Communicate framework purpose, allow iterative updates.
3. Privacy: Enforce minimum group sizes, aggregate small cohorts.
4. Cross-Group Oversight: Perform supplemental equal-value studies across occupations.
5. Band Integrity: Validate internal evaluation through calibration exercises.
6. Administrative Load: Phase implementation, leverage HRIS automation.
7. Benchmark Mapping: Create reference tables linking ISCO/bands to survey codes.

Denmark

Firms report by DISCO (ISCO) codes + level; union dialogue drives targeted remediation, closing category gaps over time.

Company A

Uses internal job families + grades to report an <1% equal pay gap globally, reflecting robust like-for-like parity.

UK NHS (Agenda for Change)

National point-factor bands across all trusts ensure standard pay for equal roles, minimizing equal pay claims.

M Consulting

Analytics by function + level identifies specific cohort gaps and informs corrective actions to improve promotions and pay.

Insurance Europe

Member insurers share pay-gap analyses by ISCO groups with unions, balancing transparency and data manageability.

Combining ISCO with internal job bands delivers an objective, transparent, and globally consistent framework to group jobs of equal value. It aligns with EU legal requirements, supports precise pay-equity analyses, and underpins robust ESG disclosures. While proprietary systems offer granularity, ISCO+bands brings external credibility at minimal cost. Implemented with strong governance, stakeholder involvement, and periodic review, this approach is both defensible and practical—transforming compliance into a catalyst for more equitable, sustainable business practices.