On 6 June 2023, Directive (EU) 2023/970 of the European Parliament and of the Council to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms entered into force. The deadline for implementation of the Directive by EU member states, including Poland, is 7 June 2026. There are therefore only two years left to enact detailed regulations on the subject. What changes will the implementation of the Directive bring to the Polish legal order and what tasks will Polish employers face in this respect?
Closing the wage gap
The most important objective of the Directive indicated by the EU Legislator is to eliminate the gender pay gap. Across the European Union, the pay gap remains at around 13%[1] . The Directive is intended to give the tools to obtain reliable statistical data on the size of the gap, as well as to provide the tools to combat it effectively.
The EU Legislator concluded that the negative economic and social impacts caused by COVID-19 disproportionately affected women's working and pay conditions. It also pointed out that wages in typically feminised occupations tend to be lower than in professions popular with men. Also, women tend to have the majority of domestic responsibilities. The intended role of the Directive is to provide mechanisms to reduce these negative social phenomena.
What are the mechanisms then?
Increasing the transparency of remuneration
One of the proposed mechanisms for combating the wage gap under the Directive is to ensure that salaries are more transparent. The criteria for awarding wage setting and progression are to be clearly defined and should be based on objective criteria (not discriminatory in nature).
In practice, this may mean an obligation to introduce clear pay scales and salary ranges for individual posts or groups of posts and salary progression. The same applies to bonuses and various types of allowances. According to the Directive's definition, 'remuneration' comprises not only the basic salary, but also all other components, including variable and non-monetary ones.
For some employers, this may mean the need to introduce more transparency into remuneration systems. This, in turn, may involve compensating for any differences that may have arisen in the course of operations (and potentially increasing the remuneration budget). In practice, many employers, when implementing internal remuneration regulations, have refrained from including in the intra-company documents pay scales or bonus levels, referring in this respect only to individual employment contracts. Employees, in turn, were not aware of the framework adopted for particular positions, which weakened their negotiating position. The Directive aims to end this kind of practice.
In addition, irrespective of the content of the internal wage regulations, employees will be able to request detailed information from their employer on their remuneration, as well as statistic information on the employer's average remuneration, broken down by gender, for the same positions. The purpose of this information is to enable the employee to compare how his/her salary compares with other employees in the same job group.
Additionally, remuneration will not only be considered in the context of one employer. If there are common pay conditions within a group of entities (which is often the case with global groups), the comparison of salaries will also be able to be made taking into account these other entities.
The amount of the employee's salary will also not be covered by confidentiality, which has happened before.
Pay transparency in recruitment
The principle of disclosure of remuneration will apply not only to the period of employment, but also to the recruitment process itself. The Directive imposes an obligation on employers to inform job applicants of the level of remuneration offered after employment, or a range of it, so that the applicant can undertake well-grounded salary negotiations. This obligation can be implemented for example by including this information in the recruitment advertisement or before the interview.
The form adopted to inform candidates of the level of remuneration offered can have far-reaching practical consequences. Often, external job applicants are offered more favourable pay conditions than employees already employed in similar positions within the organisation, as an incentive to change jobs. In this case, the transparency of the remuneration offered to candidates may result in pressure for salary increases by already employed employees. It may also entail their dissatisfaction, which may increase turnover among staff, especially highly qualified. Such risks should be taken into account when planning recruitment and information channels towards candidates.
At the same time, the Directive expressly provides for a prohibition to obtain information from candidates on their previous salary.
Wage gap reporting
Employers will also be required to report statistical data on wages paid. The data to be disclosed will include the gender pay gap with a breakdown by wage component.
In the first instance, i.e. from 7 June 2027, this obligation will apply to employers with 150 or more employees. From 7 June 2031, this obligation will be extended to employers with 100 or more employees. Smaller employers may publish such data on a voluntary basis, unless the Polish Legislator imposes such an obligation on them explicitly. This is because the Directive explicitly provides freedom for Member States in this respect. We have yet to confirm whether the Polish Legislator will also come up with such an initiative.
The largest employers, namely employing 250 or more people, will be required to prepare such salary reports on an annual basis; smaller entities every three years.
If the pay gap is not justified by objective and gender-neutral factors – employers will be obliged to implement remedial measures.
Sanctions for employers
The Directive provides for the possibility for employees (and also former employees) to claim in court compensation for pay (both basic and variable components) if it has been underpaid without objective reasons, as well as compensation for non-material damage. In such a case, it will be up to the employer to prove that it did not discriminate against the employee concerned.
Employees are to be entitled to claim compensation and damages in full. These compensations are not to be capped. In turn, the limitation period is to be no shorter than three years, counted in principle from the date on which the employee becomes aware of the existence of unjustified pay disparities.
The Directive also provides for the application of criminal sanctions for unjustified pay differentials, explicitly mentioning a fine among the possible penalties. The detailed rules for determining the amount of the fine will be regulated by national legislation. However, the EU Legislator has clearly indicated that these penalties are intended to have a deterrent effect.
Criminal liability is essentially personal. This means that possible fines will be imposed, for example, on the managers or persons responsible for the HR area, not on the employer as such.
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The direction of change for closing the gender pay gap has been outlined. And although we will still have to wait for detailed solutions, it is worth starting preparations in advance and not postponing them until the last minute. It may be necessary to carry out a pay audit of the gaps and review payroll records for transparency to be well prepared for the new responsibilities and reduce the risk of potential liability.