Pay Equity Audit

A pay equity audit is a systematic analysis of compensation data to identify whether employees doing similar work are paid similarly, regardless of gender, ethnicity, age, or other protected characteristics.

The process involves grouping employees into comparable roles, comparing average and median compensation across demographic categories, investigating gaps to separate legitimate factors from unjustified ones, and creating a remediation plan.

Pay equity audits are no longer optional in many jurisdictions. The EU Pay Transparency Directive requires companies with 150+ employees to report gender pay gaps starting 2027. Any unjustified gap above 5% triggers a mandatory joint assessment with worker representatives.

The companies doing this well don't treat it as an annual project. They monitor pay equity continuously, checking every new hire, promotion, and comp adjustment against the band and comparable employees in real time.