SALARY TRANSPARENCY AND EQUAL PAY BETWEEN EMPLOYEES WITH INDIVIDUAL EMPLOYMENT CONTRACT FROM ROMANIA

Summary

The European Union's Pay Transparency Directive (2023/970), set to be transposed into Romanian law by June 7, 2026, marks a significant shift from the current practice of salary confidentiality in Romania towards greater transparency and equal pay. The directive's methodology centers on proactive disclosure requirements for employers and robust enforcement mechanisms to address gender pay disparities. Currently, Romanian law, particularly Article 163 of the Labour Code, generally stipulates that salaries are confidential, and employers are not routinely required to disclose detailed remuneration information or conduct mandatory pay analyses. While the Romanian Constitution and Labour Code recognize the principle of pay equity, existing protections lack structured reporting and transparency mechanisms. The findings from the anticipation of this directive highlight several key changes. Employers will be mandated to provide applicants with initial salary levels or ranges in job advertisements or before the first interview, based on objective, gender-neutral criteria. This moves away from vague terms like "competitive salary". Furthermore, employees will gain the right to request information about their individual pay level and the average pay levels for comparable positions, disaggregated by gender. The directive also prohibits clauses that restrict employees from disclosing their pay information. For employers with 100 or more employees, mandatory gender pay gap reporting will begin in 2027, requiring disclosures on mean and median gender pay gaps, pay gaps in variable components, and gender distribution across pay quartiles. If an unjustified gender pay gap of 5% or more persists, employers will be required to conduct a joint pay assessment with employee representatives and implement corrective measures. The implications of the EU Pay Transparency Directive for Romania are far-reaching, requiring fundamental changes in recruitment practices, compensation structures, and internal communication regarding remuneration. Employers will need to develop and document clear, gender-neutral pay criteria and progression policies. The burden of proof in discrimination cases will shift to employers, meaning they will have to justify any pay disparities. Non-compliance could lead to administrative penalties and employee rights to compensation and redress for discrimination. Despite existing national legislation on equal opportunities, the European directive introduces more specific rules and enforcement mechanisms, pushing Romanian companies to prepare for increased scrutiny and potential litigation related to pay transparency.