The 5% Pay Gap Trigger: When a Joint Pay Assessment May Be Required

A practical employer guide to Article 10 of Directive (EU) 2023/970

An at least 5% difference in pay can be an important warning sign. It is not, by itself, an automatic Joint Pay Assessment trigger.

Article 10 of Directive (EU) 2023/970 sets out a specific mechanism for employers that are subject to Article 9 pay reporting. Under the Directive framework, those employers are required to conduct a Joint Pay Assessment where the report shows an at least 5% difference in the average pay level between female and male workers in a category of workers, the difference is not justified by objective, gender-neutral criteria, and the employer has not remedied that unjustified difference within six months of submitting the report.

For employers, the practical message is simple: do not treat the 5% figure as a standalone pass-or-fail threshold. Treat it as a prompt to test the data, the relevant worker category, the explanation, and the evidence behind it.

Why the 5% threshold matters

The 5% threshold is designed to focus attention on potentially unjustified differences in average pay within a category of workers. It sits inside a wider pay-transparency and equal-pay framework; it is not a separate rule that turns every statistical difference into a confirmed pay-discrimination finding.

The key question is not simply, “Is there a 5% gender pay gap somewhere in the organisation?” Article 10 focuses on the category-specific average pay levels shown through Article 9 reporting.

That makes the category of workers important. A company-wide headline figure may show a useful overall pattern, but it does not alone answer the Article 10 question. Employers need to be able to understand how the relevant pay data is grouped, how the comparison was made, and whether there is a documented, objective explanation for any difference.

When a Joint Pay Assessment may be required

Article 10 applies to employers who are subject to pay reporting under Article 9. Under the Directive framework, those employers are required to conduct a Joint Pay Assessment in cooperation with workers’ representatives where all three Article 10 conditions are met.

The 5% figure alone is not enough: the difference must also be unjustified under the Directive’s objective, gender-neutral criteria requirement and remain unremedied within the required six-month period.

The three conditions employers need to understand

Article 10 concerns employers subject to Article 9 pay reporting. Article 9 reporting includes a gender pay gap by categories of workers, alongside other organisation-level pay-gap information.

For an employer within that reporting framework, Article 10 requires all of the following:

1. The pay reporting shows an at least 5% difference

The reporting must demonstrate a difference in the average pay level between female and male workers of at least 5% in any category of workers.

“At least 5%” includes a difference of exactly 5%. It does not mean “more than 5%”.

2. The difference is not justified by objective, gender-neutral criteria

The employer has not justified the difference in average pay level using objective, gender-neutral criteria.

The Directive requirement is that the difference is justified using objective, gender-neutral criteria. As practical GenderGov guidance, employers should document why the criteria are relevant to the work and how they are applied, so the explanation can be reviewed consistently.

3. The unjustified difference has not been remedied within six months

The employer has not remedied the unjustified difference in average pay level within six months of the date the pay reporting was submitted.

The six-month condition is therefore linked to an unjustified difference identified through the reporting process. It should not be treated as a reason to defer investigation until the end of the period. Employers need sufficient evidence and governance to establish what the difference is, whether it is justified, and what action is required.

What counts as objective, gender-neutral justification?

Article 10 refers to objective, gender-neutral criteria. The Directive’s wider equal-pay framework requires pay structures to avoid gender-based pay differences for equal work or work of equal value unless they are justified on that basis.

For comparing work of equal value, the Directive points to objective factors including skills, effort, responsibility and working conditions:

• skills;
• effort;
• responsibility; and
• working conditions.

In practical employer guidance, additional factors may be relevant where they are justified and applied without gender bias. The issue is not the label placed on a factor; it is whether the employer can explain the relationship between the factor and the work.

As practical employer guidance, GenderGov recommends tracing the link between the job framework, pay criteria, and outcome shown in the data. Informal negotiation history, unexplained managerial discretion, or an assumption that a market adjustment must be sufficient should not be treated as a substitute for that documented explanation.

What the six-month remediation period means

The six-month period starts from the date the Article 9 pay reporting is submitted. Under Article 10, the relevant question is whether the employer has remedied an unjustified difference in average pay level within that period.

This makes timing and evidence management important. An employer should be able to identify:

• the reporting submission date;
• the category of workers affected;
• the data and methodology used;
• the rationale relied upon for any justification;
• the action taken where the difference was not justified; and
• the evidence that the action addressed the difference.

Correcting an unjustified difference is not the same as preparing a narrative about it. A description of the statistic may be useful, but Article 10 is concerned with identifying, remedying, and preventing unjustified differences in pay.

How pay-gap reporting and the Joint Pay Assessment mechanism fit together

Article 9 and Article 10 serve different but connected purposes.

Article 9 requires specified pay-gap information to be reported, including the gender pay gap between workers by categories of workers, broken down by ordinary basic wage or salary and complementary or variable components. It also sets Directive-level reporting timing for employers with 100 or more workers, while allowing Member States to require reporting from smaller employers under national law.

Article 10 uses the reporting framework as the starting point for the Joint Pay Assessment mechanism. For employers subject to Article 9 reporting, the assessment question is category-specific and depends on all three Article 10 conditions.

Practical implication: a broad gender pay gap number may indicate an issue to investigate, but the employer should not use it as a shortcut for the Article 10 test. It needs category-level analysis, documented justification where applicable, and a clear record of remediation action.

What a Joint Pay Assessment must examine

Where a Joint Pay Assessment is required, Article 10 says it must be carried out to identify, remedy, and prevent differences in pay between female and male workers that are not justified by objective, gender-neutral criteria.

The assessment must include:

1. an analysis of the proportion of female and male workers in each category of workers;
2. information on the average pay levels of female and male workers, including complementary or variable components, for each category;
3. any differences in average pay levels between female and male workers in each category;
4. the reasons for those differences, where any exist, on the basis of objective, gender-neutral criteria established jointly by the employer and workers’ representatives;
5. the proportion of female and male workers who benefited from any pay improvement after returning from maternity, paternity, parental, or carers’ leave, where such an improvement occurred in the relevant category during the leave period;
6. measures to address any pay differences that are not justified by objective, gender-neutral criteria; and
7. an evaluation of the effectiveness of measures taken in previous Joint Pay Assessments.

The assessment is carried out in cooperation with workers’ representatives. Recital 43 also addresses situations where no workers’ representatives exist: Member States should take appropriate measures to ensure that workers are designated to conduct the Joint Pay Assessment, in accordance with national law and/or practice. Article 10 also requires employers to make the assessment available to workers and workers’ representatives, communicate it to the relevant monitoring body, and provide it to the labour inspectorate and equality body on request.

When implementing resulting measures, the Directive says employers must remedy unjustified pay differences within a reasonable time in close cooperation with workers’ representatives, in accordance with national law and/or practice. The measures must include analysis of existing gender-neutral job-evaluation and classification systems, or the establishment of such systems, to help exclude direct or indirect sex discrimination in pay.

What employers should do before the trigger is reached

The most effective time to prepare is before the report is submitted. Employers do not need to wait for a 5% difference to build the foundations for a defensible response.

GenderGov recommends that employers:

1. define and maintain clear categories of workers, job families, and levels;
2. check that job-evaluation and classification methods use objective, gender-neutral factors;
3. map all pay components, including variable and complementary components;
4. retain evidence for pay decisions, criteria, approvals, and exceptions;
5. review category-level results before formal reporting;
6. establish a documented process for assessing possible justifications;
7. involve relevant employee-representation stakeholders early, in line with applicable law and practice; and
8. plan how adjustments, governance decisions, and communications would be recorded if an unjustified difference is identified.

These are operational recommendations, not a substitute for the Directive’s requirements or national legal advice.

Directive requirements vs operational good practice

Practical employer checklist

Before your next reporting cycle, ask:

• Are we subject to Article 9 reporting, taking account of the Directive framework and applicable national implementation?
• Can we identify the relevant categories of workers and explain how they were defined?
• Can we calculate and review average pay levels for female and male workers within each category?
• Have we included ordinary basic pay and complementary or variable components where required?
• Do we have objective, gender-neutral criteria for pay setting, progression, and role evaluation?
• Can we evidence how those criteria were applied in practice?
• Do we have a process to distinguish an explained difference from an unjustified difference?
• Can we identify the reporting submission date and manage the six-month remediation timeline where relevant?
• Are workers’ representatives involved in the way required by applicable law and practice?
• If a Joint Pay Assessment is required, can we assemble the information and remedial plan that Article 10 calls for?

Final takeaway

An at least 5% difference, considered in isolation, is a signal to investigate with care. It does not by itself mean a Joint Pay Assessment is required, and it does not remove the need to examine whether the difference is objectively and gender-neutrally justified.

For employers subject to Article 9 reporting, the Article 10 mechanism is about the complete picture: the category-level result, the quality of the justification, and whether an unjustified difference has been remedied within six months of reporting submission. Strong pay structures, clear evidence, and early governance make that picture easier to understand and act on.