Remuneration System

As per the Lithuanian Labour Code, a remuneration system is a mandatory framework for employers, particularly those with 20 or more employees, that outlines how employees are compensated. It specifies employee categories based on job descriptions and qualifications, minimum and maximum salary levels, forms of payment, and the grounds and procedures for awarding additional pay like bonuses and allowances. This system must be approved by the employer, made accessible to all employees, and developed through information and consultation procedures, with an explicit obligation to avoid gender-based discrimination.

A Remuneration System, within the context of the Works Council Act, refers to the established method and structure by which rewards are calculated and assigned to specific roles within an enterprise, often involving the ranking of functions and the creation of salary scales. While the WOR does not grant the works council direct consent over individual wages, it explicitly grants the right of consent over the introduction, amendment, or withdrawal of the remuneration system itself. This ensures transparency and fairness in the underlying principles of pay determination and allows the works council to scrutinize the equity of compensation structures.

Under the new Czech legislation, all employers, regardless of size, will be obligated to establish and document a formal Remuneration System. This system, which can take the form of an internal regulation or a collective agreement, must clearly define the form, components, and structure of employee pay. Crucially, it must include an internal job hierarchy, classifying positions into 'groups graded according to the value of the work' based on objective and gender-neutral criteria such as complexity, responsibility, and effort. This requirement aims to ensure that pay decisions are systematic, transparent, and free from discriminatory biases, providing a clear basis for justifying pay differences and promoting pay equity.