In this Coffee Talk Special, Henrike von Platen speaks with Margrét Vilborg Bjarnadóttir, a specialist in pay equity and related reward analytics, about a question that has become increasingly relevant under the EU Pay Transparency Directive: what counts as total compensation. The discussion focuses on the directive’s broader compensation concept, the practical challenges of identifying and valuing benefits, and the implications this creates for pay governance.
The exchange makes clear that total compensation goes beyond base pay, overtime, and short-term or long-term incentives. In the directive’s wording, it includes basic pay or wage and any other consideration, whether in cash or in kind. This brings benefits into scope in a more explicit way than many organisations have previously operationalised. Housing and food allowances as well as occupational pensions are directly referenced. In practice, the conversation also points to private medical insurance, paid leave, car-related benefits, cash allowances, and other benefit components that may need to be considered as part of the overall compensation package.
At the same time, the conversation highlights that central guidance remains limited because many details still depend on member state implementation. This creates uncertainty around scope and valuation. One of the issues raised is that the employer cost of a benefit is not necessarily the same as its value to an employee. The example of health insurance illustrates the governance relevance of this distinction: different costs attached to individual use could produce apparent differences that do not necessarily reflect a meaningful difference in equitable treatment. The exchange therefore underscores that the way benefits are counted and valued may materially affect how pay gaps are understood.
A second focus of the discussion is operational readiness. If benefits are part of total compensation, organizations need to identify which benefits exist, where the relevant data sits, how that information is documented, and who will analyze it. Because benefits are often administered across different systems, assembling a complete and usable dataset becomes a governance task in its own right. The conversation also points to transparency and communication as part of the same challenge: once benefit information is brought into compensation analysis, it also becomes necessary to consider how that part of the package is explained internally.
The transcript also points to a broader analytical consequence once benefit data is available: organisations can begin to examine which employee groups use which benefits and whether benefit structures operate in a non-discriminatory way. The conversation notes that this may lead to closer scrutiny of legacy benefits, including cases where a benefit is used mainly by one group while others do not make use of it. In that context, the issue is not only whether benefits should remain in place, but also whether different groups are being served equally by the benefit design. Framed in this way, total compensation is not simply a wider calculation category. It is also a governance question about documentation, valuation, comparability, and fairness within the full compensation structure.