Which Pay Differences Are Defensible and Which Aren't?

## The short answer

A pay difference between two people doing similar work is *defensible* when it's explained by a legitimate, job-related, consistently applied factor — such as experience, sustained performance, scarce skills or a recognised geographic pay zone. It is *not* defensible when it stems from a protected characteristic, from inconsistent or undocumented decisions, or from factors that merely *correlate* with a protected characteristic (like prior salary or negotiation). The test isn't whether a reason exists, but whether it's legitimate, evidenced and applied to everyone the same way.

## Why this distinction matters

Most pay equity work comes down to one question repeated many times: *can we explain this gap?* Get the test right and you remediate real problems while confidently keeping justified differences. Get it wrong — accepting weak reasons — and you bake bias into your pay structure while believing you're being fair.

## Generally defensible factors

These can justify a pay difference, *provided they're applied consistently and documented*:

- **Experience and tenure** — genuine, relevant experience that adds value to the role

- **Sustained performance** — backed by a fair, consistent rating process

- **Qualifications or certifications** the role genuinely requires

- **Scarce or critical skills** in high demand in the market

- **Geographic pay zones** — a transparent, evenly applied location policy

- **Shift or unsocial-hours premiums** available to anyone doing that work

The common thread: each is job-related, measurable, and offered to everyone who meets the same criteria.

## Factors that are not defensible

These should never drive pay differences for comparable work:

- **Any protected characteristic** — sex, race, age, disability, religion and so on

- **Inconsistent manager discretion** — "I just felt they deserved more"

- **Undocumented one-offs** with no rationale recorded

## The dangerous middle: proxies for bias

The hardest cases are factors that *seem* neutral but quietly encode discrimination. Watch these closely:

- **Prior salary.** Anchoring an offer to someone's previous pay imports the gaps of their last employer. Because historic pay gaps exist, prior salary often perpetuates them. Many organisations now refuse to set offers based on salary history.

- **Negotiation.** Rewarding whoever negotiates hardest sounds market-driven, but propensity and freedom to negotiate vary systematically across groups — so it often produces biased outcomes.

- **Time in continuous employment** as a blunt proxy that can disadvantage anyone who took family or caring leave.

- **"Cultural fit"** or vague potential judgements that resist measurement.

A factor that correlates strongly with a protected characteristic and isn't clearly tied to job value is a red flag, not a defence.

## How to test a specific gap

When you find a pay difference, work through this:

1. **Is the work genuinely comparable?** (Same level, scope, demands.)

2. **What factor explains the gap?** Name it specifically.

3. **Is that factor job-related and legitimate?**

4. **Is it documented with evidence?**

5. **Is it applied consistently** to everyone in a similar position?

6. **Could it be a proxy** for a protected characteristic?

If you can't answer 3–5 cleanly, treat the gap as unexplained and plan remediation.

## Documentation is the deciding factor

The difference between a defensible and an indefensible gap is very often just documentation. A real, legitimate reason that was never written down looks identical to bias when a complaint arises. Record the rationale for pay decisions at the point you make them — starting offers, promotions, off-cycle increases. Contemporaneous notes are far more credible than reasons reconstructed afterwards.

## Fixing the indefensible ones

Where a gap can't be justified:

- Adjust the underpaid party's pay — never cut the higher earner

- Fix the upstream process that created it (offer rules, review calibration)

- Re-check after remediation to confirm the gap actually closed

Identifying which gaps are explained and which aren't, across a whole workforce, is data-heavy and benefits from consistent analysis; neart.ai builds enterprise-grade HR and payroll products designed to surface unexplained gaps and the factors behind them.

## Takeaway

A pay difference is defensible only when it rests on a legitimate, job-related, documented and consistently applied factor. Be especially wary of proxies like prior salary and negotiation, which look neutral but import bias. When in doubt, ask: *is this reason about the work, is it written down, and do we apply it to everyone?* If not, treat it as a gap to fix.