27 May 2026

Defensible pay: What holds up and what doesn't

RoleMapper looks at defensible pay with pay transparency legislation and employee expectations bring into focus what actually holds up under scrutiny.

Let us start by dispelling the most persistent myth. Defensible pay does not mean pay flattening. It doesn’t mean you can no longer reward for performance, skill or market demand.

A panel of reward, legal and pay equity specialists recently convened by RoleMapper came to the conclusion: You can absolutely pay differently. You simply need to be able to explain why.

The principle breaks into two questions. Are you comparing the right groups of people, those doing work of the same or broadly equivalent value? If pay differs within those groups, can you objectively justify it? That second part is where most organisations are underprepared.

The panel agreed that defensible pay is fundamentally about connecting pay decisions to business rationale – the roles, the skills and the effort required to deliver your goals. Strip out anything that is not genuinely tied to the work, and the justification becomes far cleaner.

A third dimension that tends to get overlooked: trust. Legal soundness and business relevance are necessary, but not sufficient. Employees need to find the reasoning credible too. The real target is all three working in concert: legal rigour, business logic and employee trust.

Market pay data: No longer a safe harbour

Market forces as a justification for pay variance are not dead, but they are no longer the safe fallback they once were.

The Next Retail employment tribunal case is instructive. The court accepted that pursuing profitability is a legitimate business aim. Where the argument fell down was proportionality.

The tribunal found that Next could have paid its retail operatives more and chose not to, making cost saving the primary driver. Cost alone is not sufficient under equal pay law. Next has appealed the decision, and the case continues to develop, but even as a first instance ruling it sends a clear signal: market forces can form part of a justification, but they cannot do the job on their own.

The lesson is not to abandon market data but to interrogate it. Why does the market price this role differently? Is it genuine scarcity of talent? Specialist technical skills? A role that is critical to revenue? These are the questions that require documented answers.

However, market data alone is not an explanation. The underlying reasons, such as scarcity, specialist skills or strategic importance, need to be identified and properly articulated. Without that, you are not justifying a pay decision, you are simply pointing at a number.

There is a deeper risk too. Using market rates on a role-by-role basis, without examining what is driving those differentials, can import historical undervaluation directly into your pay structure. The market frequently reflects the same biases organisations are trying to correct. That is not a justification; it is a compounding of the problem.

Performance and tenure: Useful concepts, risky proxies

Pay for performance sounds robust. In practice, it rarely is, at least not when baked into base salary. When you run a pay equity regression and control for performance ratings, the signal nearly disappears.

Performance rating distributions are typically so compressed, with most employees clustered in the middle bands, that small incremental differences in annual uplift simply cannot carry the weight expected of them. The result is noise, not meaningful differentiation.

RoleMapper’s panel's view was consistent: base pay should reflect competence, and performance reward belongs in variable pay, tied to specific and measurable objectives. That way the connection between output and reward is visible, time bound and genuinely meaningful to employees.

Tenure presents similar problems. It is commonly used as a proxy for experience, which is itself a proxy for competence. That is two steps removed from what organisations actually want to reward. The fact that tenure has supportive case law behind it does not make it the right tool. As the panel put it, just because you can use something does not mean you should.

The more defensible path is to move away from proxies altogether and define what relevant experience and competence actually look like at each level. What has someone genuinely done? What can they demonstrably deliver? Specificity around execution experience, such as having managed a P&L, navigated a particular regulatory environment and led significant organisational change, holds up far better under scrutiny than a years of service field.

The foundation: Job architecture and role evaluation

If there was one thread that ran through the whole discussion, it was the importance of documentation. Every justification for pay variance ultimately rests on having clear, accurate and current descriptions of what work is being done, what skills and experience it requires and how roles relate to one another.

A well-built job architecture is the foundation for all of it. Not just legal defensibility, but pay transparency reporting, career framework clarity, pay gap analysis and the day-to-day conversations that managers need to have with employees who increasingly arrive with a strong view of what they should be earning.

Organisations best placed to navigate the transparency era are those treating job architecture as a living structure, not a periodic project. It needs to be maintained, validated with business leaders and detailed enough to carry the weight of explanation when it matters most.

Underpinning that architecture, however, is the quality of the role evaluation that sits beneath it. Getting job levels right - consistently, transparently and in a way that can be explained to employees and regulators alike - is where many organisations still struggle.