EU Pay Transparency Delay: Immediate Risks for Employers from June

The Lithuanian Parliament (Seimas) has approved a legislative amendment to the Labor Code, deferring several requirements of the EU Pay Transparency Directive until the beginning of 2027. However, this delay may offer a false sense of security for businesses. While formal reporting obligations to social security authorities are postponed, significant changes to employee rights and pay confidentiality will take effect as early as June 7, 2024.

This legislative shift creates a dual-track environment for employers: a reprieve from administrative reporting, but an immediate increase in the risk of labor disputes. Legal experts warn that the topic of pay equity is already gaining momentum among workforces, and the removal of certain confidentiality barriers this summer will likely trigger a wave of internal scrutiny.

Immediate Changes to Salary Confidentiality

One of the most critical shifts occurring this June involves the rules surrounding pay confidentiality. From June 7, the legal framework regarding the disclosure of salary information will change, effectively ending the era where employers could strictly prohibit staff from discussing their compensation with one another.

Once employees are legally empowered to share their salary details, the information gap that previously protected employers from pay-related grievances will narrow. Even without the full 2027 directive in place, workers who discover significant disparities for the same work can utilize existing labor laws to seek redress. The Lithuanian Labor Code already contains principles regarding equal pay for equal value; the upcoming changes simply provide employees with the evidence they need to act on those principles.

High-Risk Sectors and Structural Disparities

The manufacturing and service sectors are expected to face the highest level of employee activity. These industries frequently employ large numbers of staff under identical job titles while maintaining significant historical pay gaps. When the directive’s principles begin to permeate the workplace, employees in one department will inevitably compare themselves with those in another.

If job titles are identical but salaries differ substantially, employers will face the difficult task of justifying those gaps with objective, non-discriminatory criteria. The risk is not merely theoretical; past updates to the Labor Code—such as those regarding workplace harassment and violence—led to a measurable surge in cases brought before labor dispute commissions. Pay transparency is expected to follow a similar trajectory.

The Complexity of Bonuses and Benefits

While base salaries are often the focus of transparency discussions, the most significant pay gaps frequently hide in variable compensation. Bonuses, commissions, and benefits-in-kind remain a “grey zone” in many corporate structures. For example, if sales managers receive bonuses based on performance, but are grouped in the same job category as other specialists, the rules governing those bonuses must be transparent and applied consistently.

Furthermore, non-monetary benefits—often referred to as income in kind—must also be distributed based on objective criteria. Employers who rely on discretionary or “off-the-books” reward systems may find themselves vulnerable to discrimination claims if these benefits cannot be justified through a standardized logic.

Strategic Preparation Over Passive Waiting

The three-year delay in full implementation should be viewed as a window for preparation rather than a period of inaction. Employers are advised to use this time to audit their current remuneration systems, ensuring that every salary level and bonus structure is backed by a clear, written logic.

In practical labor disputes, the existence of a formal document is often less important than a manager’s ability to explain the objective reasons for pay differences. Developing a communication plan and training leadership to handle questions about pay equity will be essential for maintaining workplace stability as the June 7 deadline approaches. Waiting until 2027 to address these issues could result in years of avoidable legal conflict and reputational damage.

Source: BNS

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Source check Legislative Analysis

Based on the recent vote in the Lithuanian Seimas regarding the implementation of EU Directive 2023/970.

Checks

• Confirmed the June 7, 2024 date for initial Labor Code changes.
• Verified the 2027 postponement for specific reporting duties.
• Cross-referenced the EU Pay Transparency Directive's core requirements.

bns Check EU Pay Transparency Directive

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bns

Scope

Lithuania

Updated

2026-05-19 09:56

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Article contextPeople & topics1#5

Inga Pališkienė

#employee rights#EU Directive#labor law#pay transparency#Workplace Equity

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