Transparent Working Conditions Directive – Major Changes to the Labour Market

Introduction

The EU Pay Transparency Directive 2023/970 of 10 May 2023 (the “Pay Directive” or the “Equal Pay Directive”) is a landmark solution for the labour market. Although Member States have to implement the provisions by 7 June 2026, many employers are already expressing concerns about the implementation of the new regulations into the Polish legal order. What changes does the directive bring and how will it affect the labour market?

The essence of the Equal Pay Directive

One of the key objectives of the European Union is to create a workforce system based on equal and decent employment conditions. The main objectives of EU Directive 2023/970 include:

1. Equal pay – ensuring that all workers receive equal pay for equal work or work of equal value in order to eliminate discrimination in employmenton the grounds of gender.
2. Access to information on pay – increasing workers’ awareness of how much they earn compared to others doing the same job.
3. Pay transparency – controlling the level of pay of women and men doing the same job or work of equal value.
4. Employer reporting obligations – making it compulsory for companies with more than 250 workers to publish pay structure reports annually.
5. Pay gap reporting – eliminating gender pay gaps through mandatory transparent reporting.
6. Compensation for victims – enabling workers to seek compensation in cases of perceived pay discrimination.

The gender pay gap – basic information

Under the Pay Directive, employers are required to provide detailed reports on pay conditions to a monitoring body appointed by the Member State.

What should be included in such a report?

• the gender pay gap;
• the gender pay gap in complementary or variable components;
• the median gender pay gap;
• the median gender pay gap in complementary or variable components;
• the proportion of female and male workers receiving complementary or variable components;
• the proportion of female and male workers in in each quartile pay band; and
• the gender pay gap between workers by categories of workers broken down by ordinary basic wage or pay and complementary or variable components.

Reporting obligations

• By 7 June 2027 and every year thereafter, employers with 250 workers or more should provide the relevant monitoring reports.
• By 7 June 2027, employers with 150 to 249 workers should provide the first report, with subsequent reports every three years thereafter.
• By June 2031, employers with 100 to 149 workers must complete the first reporting obligation.
• Employers with fewer than 100 workers do not have reporting obligations, though they may do so voluntarily.

A gender pay gap exists if the difference in the average pay level between female and male workers is more than 5%.

Protection of Workers’ Rights

Workers who consider themselves wronged by a failure to apply the principle of equal pay have the right to take legal action to enforce their rights. Court proceedings will be easily accessible to workers and those representing their interests. It is also important that the possibility to seek compensation also applies after the termination of the employment relationship within which the infringement occurred.

Penalties provided for by the Equal Pay Directive

Member States are required to introduce effective, proportionate and dissuasive penalties for infringements of the equal pay principle. These penalties should have a preventive effect, particularly against employers who commit repeated infringements. Penalties mainly include fines, the amount of which is determined at a national level.

Controversy surrounding the parliamentary legislative process

Pay disclosure is still a taboo in Polish society – both among workers and employers. The practice of openly disclosing pay has not yet been adopted in Poland, which means that the implementation of the Equal Pay Directive may face resistance.

Work is currently underway in the Sejm to amend the Labour Code in order to implement the Equal Pay Directive. The bill raises many controversies. Some experts stress that pay is covered by secrecy, which protects the competitiveness of companies. However, other experts point out that the legislative process should be carried out in the governmental mode, which would allow for a more thorough analysis and regulating potential issues. The parliamentary procedure for the adoption of amendments is assessed as hasty, which may result in legal loopholes.