Are You Ready for the Pay Transparency Directive?

Despite having a Equal Pay Directive in place for nearly 20 years, the average gender pay gap in the European Union still stands at 13%, affecting all levels and job roles. Disturbingly, this gap widens significantly in managerial positions, with an average disparity of 45%. This means that for the salary of one man in a managerial role, you could potentially hire two equally qualified women.

To address this issue and ensure compliance, the Pay Transparency Directive came into effect in June 2023. The Croatian government has announced plans to implement this directive into national law by summer 2025.

Under the new directive, any pay discrepancies of more than 5% for the same position must be justified with objective and gender-neutral explanations.

What Does Pay Transparency Entail?

• Rights to Transparency During Recruitment:
  • Transparency regarding initial salary offers.
  • Clarity on salary ranges for open positions.

• Rights to Transparency During Employment:
  • Access to information on average pay grades and gender pay differences for employees performing equal work or work of equal value.
  • Clear criteria for salary determinations and increases, which must be objective and gender-neutral.

Reporting Obligations: 
The directive introduces mandatory reporting for:

• Employers with more than 250 employees—annual reporting required.
• Employers with 100 to 250 employees—reporting every three years.

Should reporting reveal pay discrepancies exceeding 5% without a valid, objective justification, employers will be required to conduct a joint salary assessment in collaboration with employee representatives.

Employer Accountability for Inequality:

• In legal disputes, the burden of proof lies with the employer.
• Affected employees may seek compensation, which may include differences in unpaid salaries, bonuses, and benefits.
  
  

If you are interested in our services for reviewing employee pay based on gender or establishing a control and reporting system for pay transparency, or if you simply wish to learn more about this mandatory measures, please reach out to our team.