Employer Action Code: Act
The government has put forth a proposal to transpose the EU Pay Transparency Directive to the social partners. The draft is broadly in line with the directive; however, some details on reporting requirements and joint pay assessments are expected to be addressed at a later stage. Lithuanian labor law already fulfills some EU directive requirements around pay equity and transparency; specifically, companies with 20 or more employees are required to have formal pay structures in place to support equal pay, covering base and variable pay structures as well as procedures for indexation of pay. These employers must also submit their monthly pay data to the State Social Insurance System (SoDRA), which publishes total average pay gaps by gender, and on request, provide employee representatives with pay gaps by occupational group at least once a year. Lithuanian companies are also required to include base salary or salary ranges in job advertisements.
Key details
Proposed new rules include:
- Pay transparency during recruitment: Employers would be prohibited from inquiring into job applicants’ prior salary histories and would be required to identify the collective bargaining agreement (if any) applicable to the position before hiring.
- Pay gap reporting: Current pay gap reporting to employee representatives would be based on categories of worker. If there are pay gaps by category of worker of 5% or more that the employer could not justify or correct within six months, the employer would need to carry out a pay assessment in cooperation with employees or employee representatives.
- Pay structures: The requirement to have formal pay structures would apply to all companies. In addition, companies would need to be able to determine categories of worker using gender-neutral job factors (such as responsibility, skills, effort and working conditions), with the formal pay structures aligned to these criteria and categories. Companies with 50 or more workers would have to incorporate procedures for pay increases as part of their pay structures.
- Right to information: Employees would have the individual right to request information on their pay level relative to the average pay level of employees doing work of equal value, broken by gender; the draft, however, does not include details on the deadline for companies to provide the requested information. Employers would also be required to inform employees annually of their right to this information and the procedures to obtain it. Employers could not prohibit employees from disclosing their salary for the purpose of enforcing equal pay.
Employer implications
In terms of overall pay gaps in Lithuania, average gross earnings for women in the private sector were 12.5% lower than those of men in 2023, roughly equal to the EU average (Eurostat data). The directive is expected to have a lasting impact on pay equity and transparency among EU member states. Employers in Lithuania should monitor the legislative process closely and start preparing for the new requirements.
Contacts
