Employers are obliged, from June 7, to justify salary differences. What new rights do employees have and what do companies risk?
The European directive on salary transparency enters into force in Romania starting on June 7 and significantly changes the rules in the labor market. Employers will be obliged to communicate the salary level in advance, eliminate non-transparent practices and base their salary decisions on objective and documented criteria, while employees will have extended rights to information and access to data on remuneration. The new rules aim to reduce unjustified pay gaps and increase pressure on companies to formalize and justify their pay policies.
Employers are obliged to justify salary differences. Photo by Shutterstock
The EU Pay Transparency Directive brings a major challenge for companies: not simply communicating salaries, but the ability to objectively justify why employees in similar positions are paid differently.
Employers who do not have clear and documented criteria risk fines of up to 30,000 lei, complaints, controls, litigation and compensation, lawyers warn. For many companies, the financial impact of such litigation can far exceed the value of the fines.
What's new in the Pay Transparency Directive?
The main changes that employers need to consider are:
• The obligation to communicate the salary or the salary range before the interview, so that candidates know the level of remuneration from the recruitment stage; it is not mandatory to mention the salary in the recruitment notice, if the interviewee is notified by e-mail before the interview;
• The prohibition to request information about the salary history of the candidates, in order to avoid the perpetuation of possible salary inequities;
• The right of employees to request information on remuneration levels for categories of employees performing the same work or work of equal value;
• The obligation of companies to have objective and neutral criteria for establishing salaries, promotions and professional development, criteria that must be able to be explained and justified;
• Additional reporting obligations for employers with more than 100 employees, including regarding wage differences between women and men;
• The possibility of checks and complaints that are easier for employees to support, if they believe that there are unjustified salary differences.
“Many employers believe that the main change will be the communication of salary in the recruitment process. In reality, this is one of the simplest obligations. The major change is that salary differences will have to be supported by objective and documented criteria. It is not enough for the employer to consider that there are reasons for different remuneration; these reasons must be concretely demonstrated. Therefore, companies should start a process of analyzing remuneration policies, post, evaluation and promotion criteria and to request specialized legal advice to identify potential risks and comply with the new obligations before they generate litigation or sanctions“, says lawyer Elena Grecu.
Wage differences remain legal, but must be justified
The lawyers from Grecu & Asociații emphasize that the new legislation does not oblige employers to pay identically all employees who occupy the same position. Salary differences may still exist, but they must be based on objective criteria such as professional experience, level of responsibility, performance, qualifications, professional certifications or other elements relevant to the activity carried out.
Example: when two employees may be paid differently for the same position
For example, two marketing specialists can have salaries of 6,000 and 8,500 lei if one has significantly more experience, coordinates colleagues and manages more complex projects. In the absence of such objective and documented differences, the company may be obliged to explain and justify the difference in remuneration.
The lawyers gave the example of a company that has two marketing specialists, both having the same function in the organizational chart:
Employee A
• professional experience: 2 years;
• manage local campaigns;
• does not coordinate other colleagues;
• salary: 6,000 lei.
Employee B
• professional experience: 8 years;
• manage national campaigns;
• coordinates two colleagues;
• holds relevant professional certifications;
• salary: 8,500 lei.
In this case, lawyers say the salary difference can be justified by experience, responsibilities and additional skills.
Conversely, if the two employees have similar experience, comparable duties, close results, and the same level of responsibility, and the company cannot demonstrate objective reasons why one is paid significantly better than the other, the situation may generate questions from the employee and, in some cases, claims or litigation regarding wage discrimination.
In many companies, salaries have been built up over time through individual negotiations, depending on the market context, the difficulty of recruitment or the policy of each manager. With the entry into force of the new rules, these differences will be able to be analyzed more carefully and will require clear justifications.
“The fact that two employees in the same position have different salaries is not in itself a violation of the law. The problem arises when the company cannot explain and demonstrate why that difference exists. Without proper documentation, the risk of challenge increases significantly”show the lawyers.
Heated debate on the subject of salary disclosure during recruitment. What employers and employees are saying. “Work for free, if possible”
The main risks for employers
According to them, the most important risks generated by the new legislation are:
• complaints made by employees regarding differences in remuneration;
• controls and verifications by the competent authorities;
• disputes regarding wage discrimination;
• the obligation to pay compensation to the injured persons;
• the obligation to correct the observed salary differences;
• contraventional sanctions that can reach up to 30,000 lei, according to the transposition project under debate.
In practice, the financial impact of a dispute can significantly exceed the amount of a fine, especially when wage differences for previous periods, damages or court costs are claimed.
What employers should do
Lawyers recommend that companies start now to analyze their salary policies and how remuneration is determined in the organization.
Recommended measures include:
• performing an internal salary audit;
• defining clear and objective salary criteria;
• documenting decisions regarding salaries, bonuses and promotions;
• review of recruitment procedures;
• preparation of internal procedures for managing requests from employees.
“Companies that will prepare in time will have an easier transition to the new legislative framework. The priority will not be to change recruitment announcements, but to build a transparent, coherent and well-documented salary system. Therefore, we recommend that employers start analyzing salary policies, job descriptions and evaluation and promotion criteria now, as well as request specialized legal advice to identify possible risks“, warn the lawyers.
The main obligations of employees
Transparency in recruitment The employer must communicate the salary or salary range prior to employment and not request the candidate's salary history. Job postings must be gender neutral
Internal transparency The employer must provide employees with access to salary setting criteria and promotion criteria so that the pay system is clear and explainable
To respect employees' right to salary information Employees can request information about their own salary and about average levels of remuneration for comparable positions, and the employer must respond within a reasonable time limit set by national law
Wage gap reporting Companies with more than 250 employees report the wage gap annually starting in 2027. Companies between 150 and 249 employees report once every three years starting in 2027. Companies between 100 and 149 employees report once every three years starting in 2031. Companies under 100 employees do not have a general periodic reporting obligation
Correcting unjustified wage differences If the pay gap between women and men exceeds 5 percent and cannot be objectively justified, the employer must carry out a joint assessment and apply corrective measures
What does the European directive on salary transparency mean for employees and employers in Romania
To whom is the data transmitted?
Companies must transmit the data to the national authority designated by the member state, for example the Labor Inspectorate or the Ministry of Labor depending on the national transposition, but also to employees or their representatives in the case of requests or internal assessments.
According to EU Directive 2023/970 and the transposition projects discussed in Romania:
Fines and penalties
Member States shall establish effective and proportionate sanctions in case of non-compliance, which may include administrative fines applied by the authorities, the obligation to correct wage situations, the granting of compensation to employees in case of wage discrimination, as well as the performance of mandatory audits and additional controls.
Employee rights
- Right to know salary or salary range before employment
- The right not to be asked about previous salary
- The right to discuss salary freely
- The right to receive information about your own salary and average salaries for similar positions
- The right to equal remuneration for work of equal value
