New Employer Obligations on Pay Transparency

Last year the EU adopted Directive 2023/970 of the European Parliament and Council, which strengthens the principle of equal pay for men and women. This new legislation imposes several obligations on employers concerning pay transparency and introduces mechanisms for enforcing equal pay.

Employers should be aware of the five most important points of the Directive:

1. Equal Pay: Employers must implement pay structures guaranteeing equal pay for the same work or work of equal value. The definition of “equal work” is clear, but determining “work of equal value” may be more complex. The directive emphasizes that the value of work should be assessed based on objective, gender-neutral criteria such as skills, effort, responsibility, and working conditions.
2. Recruitment: Employers are required to provide candidates with information about starting salaries or salary ranges, based on objective criteria, before the interview. Job advertisements and recruitment processes must be gender-neutral, and employers are prohibited from asking candidates about their previous salaries.
3. Reporting Obligations: Employers are obligated to report detailed information on the gender pay gap within their organization. Reports must include data on the overall pay gap, its components, median pay, and the percentage of male and female employees receiving variable pay. Larger companies must report annually, while smaller companies will report every few years. If reports indicate a gender pay gap of at least 5%, the employer will be required to conduct a pay review and provide the causes of the gap, and corrective measures.
4. Employee Protection: Employees will have access to legal proceedings to enforce equal pay principles, even after their employment has ended. In case of violations, employees are entitled to full compensation, including back pay and damages for non-material harm.
5. Protection from Retaliation: Employees who assert their rights regarding equal pay cannot be treated less favourably. The Directive ensures protection against dismissal or other forms of adverse treatment related to such actions.

The Directive represents a significant step toward eliminating pay disparities between men and women in the EU. Employers must adapt their pay policies to meet these new standards of transparency and fairness, ensuring that gender-based discrimination in compensation is eliminated. These changes will need to be implemented in Poland by 2026.

For more information, please get in touch with the Penteris Head of Compliance Jeremiasz Kuśmierz.