Directive (EU) 2023/970, enters into force in Lithuania, serving to strengthen the principle of pay transparency for men and women, and the enforcement of mechanisms which ensure the principle of equal pay for equal work or work which is of equal value, both for men and women (hereinafter referred to as the ‘directive’).
The fact that the directive must be transposed into Lithuanian national law by 7 June 2026 is no longer fresh news. It will apply to all companies, institutions, organisations, and employees, and anyone who is intending to seek employment. Therefore major changes await us all, but the greatest concern about how to prepare and implement it properly falls upon the shoulders of employers.
The directive’s objectives are ambitious: to ensure compliance with the principle of equal pay for equal work or work which is of equal value, to implement the right to equal pay for men and women, to guarantee pay transparency, and to establish effective, proportionate, and dissuasive sanctions for infringements of those provisions which relate to the right to equal pay.
What can be done now?
I. Review the remuneration policy or approve it if you do not yet have one.
Regardless of the size of the company, institution, or organisation, the compulsory remuneration regulations must establish employee categories, ie. employees who are carrying out the same work or equivalent work are grouped impartially according to job evaluation criteria. It is worth starting to prepare these now.
The criteria should include the following:
skills, efforts, responsibility, and working conditions and, where necessary, other factors which are relevant for the particular job or position; not to be directly or indirectly related to the gender of employees; to be agreed with employee representatives; and to be applied objectively and in a gender-neutral manner. They must take into account relevant social and emotional skills; and provide for a system of bonuses, allowances, and indexation.
Companies which have more than fifty employees must establish provisions for wage increases.
II. Conduct a wage audit, ie. assess whether there are any differences between the wages of men and women, identify the reasons for any such differences, and determine whether all employees have equal opportunities to receive additional benefits (a car, training, health insurance, pension insurance, etc).
III. Adjust the wage payment system by establishing and specifying wage ranges and providing for a wage increase procedure.
IV. Prepare for the comparison of pay details and the procedure for publishing such details.
The directive requires employers to provide more information: issuing annual reports on the gender pay gap will be compulsory, and this information must also be provided to employees and their representatives.
V. Review employment contracts and amend them if the information about an employee’s salary is considered to be confidential.
VI. When planning to hire new employees, do not ask about their current or previous salary during job interviews, provide information about the provisions of the collective agreement, and do not specify in employment contracts that information about an employee’s salary is classified as being confidential.
Is it really time to prepare for the forthcoming changes? Yes it is, because corporate responsibility in implementing wage transparency can help to win the competitive battle for good employees. The preparation of all internal legislation to ensure the smooth implementation of the changes will certainly take time, and, if the directive is transposed, companies, institutions, and organisations which do not have them in place may face complaints from employees in regard to discrimination, while also being liable for compensation claims and fines, which certainly will be significant.
The directive gives European Union Member States the right to set specific penalties for employers who violate rights and obligations which have been set out in the directive regarding equal pay, but such penalties must be effective, proportionate, and dissuasive.
Compensation or damages for an employee would include the full recovery of unpaid salary amounts and related bonuses or payments in kind, plus compensation for lost opportunities, non-pecuniary damages, compensation for any damages which have been caused by other relevant factors which may include multiple discrimination events, and also interest for any period of delay in making payments.
If the employer (the defendant) wins a case concerning a claim for discrimination within the field of remuneration, the claimant (the employee) would not be required to pay any court costs.
The employer would also bear the burden of proof and, in the event of a dispute, would have to prove that remuneration paid by it does indeed comply with the requirements of the directive.
Does it all seem confusing and complicated? We can help you to overcome this challenge.