Changing the labor payment system - key highlights

Ina Muckienė, attorney-at-law, associate partner, Zaleckas Partners law firm

I often encounter clients' concerns about changing the payment system. necessities , waiting for the entry into force of the Pay Transparency Directive. For your attention, several aspects from my practice that will help you assess the extent of the necessary changes. For those who have an objective, transparent and "live" - corresponding to real processes - pay system, the changes will be minimal. More detailed information below.

1. The directive's requirement to have a gap of no more than 5% does not in itself mean that in a specific category (group) of employees the salary can fluctuate only within these limits . I have heard the concern that "we now have to equalize salaries for all men with an accuracy of 5%?!" It should be remembered that the salary gap must disappear between men and women , and not absolutely between everyone. After all, in the same category, some employees may have one year of experience, others - three years, some - have only acquired the basic education required for that category, others - have additional certificates. Therefore, one employee may meet 100% of the requirements for that category and be in the upper salary range, another - only 60% of the requirements, and be in the lower range. Even in all the guidelines recommended by the VDI, the difference from the median in a specific category may fluctuate by 15-25% in each direction. However, if the margins are extremely wide and/or significantly exceed the margins actually applied, amendments are necessary .

   
   

2. All five criteria (skills, qualifications, effort, responsibility, working conditions) for comparing positions will become mandatory. However, they may already exist in your system, just being named. otherwise : skills can be defined as a requirement for relevant experience, qualifications as a requirement for relevant level of education etc. So these criteria are not new. On the other hand, previously neither the "weights" of each criterion in each category were technically calculated, nor were their contents detailed, which made it difficult to compare the quality of positions . If the directive enters into force and these things are not done, the employer's possibilities to defend himself in the event of a dispute will be quite limited.

   
   

3. The search for categories of employees of equal value should not become an artificial exercise of “let’s definitely find equal value” – perhaps different positions in your company automatically mean unequal value. However, it is necessary to pay attention to those employee groups dominated by one gender – is it not the case that after “weighing” all the above criteria, the value of the work is the same, but the remuneration is different, due to the stereotype “everyone pays the same”. It is only important to assess which employees to include – whether only permanent employees, or also temporary employees, whether full-time employees, or not necessarily, etc.

   
   

4. Overlapping salary ranges in the corporate hierarchy is not per se prohibited . However, assess whether such overlap is illogically large and applies consistently, or whether it occurs only in exceptional, objectively justifiable cases. If it is consistent, for example because men in “lower” categories negotiate salaries more easily than women in “higher” categories that require more responsibility, the ranges should be adjusted, and women in “higher” categories may need to receive a salary increase.

   
   

5. When using the sources recommended by the VDI , which are useful for reviewing the pay system, do not forget that they are all recommendations, there are contradictions between them, and “good practices” is a fairly abstract term. Therefore, all of them must be applied while maintaining critical thinking and focusing more on their principles and the specifics of your workplace than on the provided templates . I personally also like the “ Gender neutral job evaluation for equal pay: a Step-by-step guide” published by the International Labor Organization : although it is not mentioned among the recommendations by the VDI, it provides important highlights for the action plan, methods and useful questionnaires, even helping to choose the right consultant.

Prepared by

Ina Muckienė

APB Zaleckas Partners

Attorney, Associate Partner