EU pay transparency: what it actually means for employers in Lithuania

Directive (EU) 2023/970 changes how pay is set, documented and explained. In Lithuania it arrives through amendments to the Labour Code, and the practical requirements are stricter than the directive summary suggests.

The dates that matter

Reporting frequency: annually for employers with 250 or more insured persons, every three years for those with 100 to 249.

This applies to you even if you have three employees

There is no headcount exemption from the pay system requirement. A company whose only employee is its director still needs one — it can simply be short: the position group, the pay level or range, the criteria used to set it, and the rules for any bonuses or supplements.

What size does change:

• Under 10 employees. Fewer pay criteria and fewer position groups are acceptable.
• Under 50 employees. No obligation to include pay increase criteria and procedures in the system.
• 100 or more insured persons. Reporting, employee disclosure and joint pay assessment obligations apply.

How positions are grouped

Positions are grouped by the value of the work, assessed as if the role were vacant — not by who currently holds it, and not by their performance.

The criteria must be objective and gender-neutral, covering skills (including communication, collaboration and conflict resolution where these matter to the role), qualifications, effort, responsibility and working conditions. There is no maximum number of groups.

Two points that catch employers out:

A different education requirement does not by itself create a separate group. A role requiring a bachelor's degree and one requiring a master's can sit in the same group if the overall set of criteria makes them equal in value.

Location and market shortage cannot be grouping criteria. Two identical roles in different cities belong in the same group. Regional pay differences are handled inside the band, not by splitting the group.

Before any of this works, your job descriptions have to be accurate. If a description omits the level of autonomy a role actually requires, the evaluation built on it will be wrong. Fixing descriptions comes first.

What can and cannot justify paying two people differently

This is where most systems fail. Inside a position group, pay can vary — but only on grounds you defined in advance and can evidence.

Benefits in kind now count as pay

If a benefit is a reward for work and is not available to everyone in the position group on the same terms, it forms part of pay and must be valued and declared.

What changes in hiring

• You may not ask candidates about their current or previous pay. This applies at every stage.
• Before the interview, candidates must be told which collective agreement terms would apply to the role.
• Job advertisements must already state the base pay or pay range.
• Review your contract templates, confidentiality agreements and internal rules. Any clause treating pay as confidential needs to be removed or narrowed — employees cannot be restricted from disclosing their pay when exercising their equal pay rights.

The 5% trigger

Five percent is not a permitted gap. It is the point at which an obligation kicks in.

If the average pay gap between men and women in any position group reaches 5%, and you cannot justify it on objective, gender-neutral grounds, and you do not correct it within six months — you must carry out a joint pay assessment with employee representatives and submit it to the State Labour Inspectorate.

Employees can request their own pay figures and the gender averages for their own position group — annual and hourly, including benefits in kind. Not other groups, and never an individual colleague's salary. You have one month to respond, and two months to provide further explanation if the first answer is incomplete.

Where a group is too small to report averages without exposing an individual's pay, the data goes to employee representatives or the authorities instead, who tell the employee only whether a gap above 5% exists.

Penalties

The larger risk is not the fine. It is a disputed pay decision you cannot evidence, and the back pay that follows.

Two situations worth checking early

Temporary agency workers. Agency staff must be paid no less than they would receive if hired directly by the user company for the same role. The user company is legally obliged to supply that pay data and carries subsidiary liability for it. For headcount thresholds, all employees count — not only those on temporary contracts. Agree in advance which party answers pay information requests.

Group companies. Where a parent sets pay principles or a pay system centrally for its subsidiaries, or a single collective agreement covers them, pay can be compared across those entities. Where subsidiaries genuinely set their own systems independently, each stands alone. Decide deliberately which model you are operating.

What to do now

1. 1Review and correct your job descriptions so they reflect the work actually done.
2. 2Define your evaluation criteria and group positions by value.
3. 3Set pay ranges per group and document how pay is placed within them.
4. 4Audit current pay against those ranges and identify what you cannot explain.
5. 5Correct unjustified gaps — normally by raising those paid too little.
6. 6Value your benefits in kind and determine which count as pay.
7. 7Update job ads, interview practice and confidentiality clauses.
8. 8Consult employee representatives — required whenever the system is introduced or changed.

We can do this with you

Job evaluation, position grouping, pay ranges, gap analysis and the documentation that has to stand behind them. We work with Lithuanian employers and with international companies applying a group framework to their Lithuanian entity.