Published April 2026
The EU Pay Transparency Directive’s “5% trigger” is misunderstood – you may have a raw Gender Pay Gap ≥5% and no Equal Pay issue; conversely, you could have a raw Gender Pay Gap <5% and still retain Equal Pay issues.
Let’s first consider the EUPTD requirements in detail (subject to gold plating in national transpositions). Afterwards we’ll review the strategic organisational implications.
The 5% trigger applies to organisations with ≥100 employees (i.e., those companies subject to mandatory external disclosure - Article 9 EUPTD) (but beware, companies with fewer than 100 employees are still subject to the rest of the EUPTD). These organisations must determine the raw Gender Pay Gap by “categories of worker” (i.e., categories of employees performing the same work or work of equal value).
If the raw Gender Pay Gap (GPG) is at least 5% in any category of workers, is not justified on the basis of gender-neutral criteria, and is not remedied within six months of reporting, then a joint pay assessment in cooperation with the respective workers’ representatives is required.
The strategic implication is that companies must actively manage Equal Pay.
This means for organisations ≥100 employees…
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…with a raw GPG ≥5%: conduct an Equal Pay analysis. If your adjusted GPG is not statistically significant (and based on a robust, gender-neutral
model), you have strong evidence demonstrating the gap not to have occurred due to systematic bias (but rather e.g., employee distribution effects). This can be the case even if your
adjusted GPG remains
larger than 5%.
In short, no Equal Pay issue (on average); no joint pay assessment.
We’re getting into difficult territory assuming that a representative, robust, statistically non-significiant aGPG may be sufficient to demonstrate “on average, no issue” for the EUPTD. Nonetheless, it seems the best solution.
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…with a raw GPG <5%: you may still have Equal Pay issues. Conduct an Equal Pay analysis – even if your adjusted GPG is small (e.g., 1%), it could
remain statistically significant indicating a systematic gender pay bias.
In short, no joint pay assessment, but still an Equal Pay issue.
This means for organisations <100 employees…
- …you are not legally obliged to determine your raw GPG per categories of workers. But you remain in the dark. If the company’s ambition is to grow, it will surpass the 100-employees threshold and be subject to the EUPTD requirement described above. It is best to prepare for Equal Pay now rather than go through a difficult remediation later.
If you are working on this topic, I have published a book guiding companies through this complex field: “The Equal Pay Guide –
a practical framework for understanding, explaining, and managing Gender Pay, Equal Pay, Pay Equity & Pay Transparency”:
link to The Equal Pay Guide (available on multiple Amazon marketplaces)
.
Here is a simplified example for ≥5% Gap without Equal Pay issues (on average): a law firm consists of Partners, senior Executive Assistants (EAs) and junior EAs. All senior EAs earn €100k and all junior EAs earn €50k. Senior EAs are predominantly men; and junior EAs are predominantly women. The “category of worker” is “Executive Assistant”.
There is clearly a raw Gender Pay Gap (within the category of workers across all EAs consisting of seniors and juniors). This raw Gender Pay Gap can be solely explained by “level” (senior or junior). Within the levels, there is no Gap (all earn exactly the same), hence, no Equal Pay issue.
With a strict focus on Equal Pay, there is no issue. Nonetheless, other problems may persist. Why are senior EAs mostly men? Do women have the same chance as men to become a senior EA? The conversation then moves from Equal Pay to fair pay and gender-equality in broader terms.