Lithuanian Labour Inspectorate Guidance on EU Pay Transparency Directive

Lithuanian Labour Inspectorate publishes extensive guidance on the EU Pay Transparency Directive

The Lithuanian State Labour Inspectorate (hereinafter – VDI) has published a detailed FAQ addressing the implementation of the EU Pay Transparency Directive (EU) 2023/970. The guidance provides valuable insight into how Lithuanian authorities currently interpret many of the practical questions employers have been raising as they prepare for the new rules.

The Directive aims to reduce the gender pay gap by introducing greater pay transparency, objective job evaluation methodologies and stronger employee rights regarding pay information. While the national implementation process is still ongoing, the FAQ offers an early indication of regulatory expectations and highlights several areas where employers may need to start preparing well before the 31 December 2026 compliance deadline.

One of the most significant clarifications is that all employers, regardless of size, will be required to establish objective and gender-neutral remuneration systems. VDI emphasises that job positions should be grouped by factors such as skills, qualifications, responsibilities, effort, and working conditions, rather than by employee-specific characteristics.

The guidance also addresses several practical issues that commonly arise in compensation management. For example, VDI confirms that employees performing work of equal value should generally belong to the same job group, even where differences exist in education levels, employment status or work schedules. Employers may still differentiate pay within a salary range, but only where supported by objective, gender-neutral criteria such as experience, performance, competence, market conditions, or business needs.

Importantly, VDI recognises that labour market realities may justify certain pay differences. Employers may offer higher remuneration to attract or retain scarce talent, or account for regional labour market conditions, provided such decisions can be objectively justified and documented. However, the guidance warns that significant pay disparities between employees performing the same or equivalent work may create discrimination risks if employers cannot demonstrate legitimate reasons for the difference.

The FAQ also contains important reminders regarding recruitment practices. In line with the Directive, employers will no longer be permitted to ask candidates about their current or previous salary. At the same time, employers will be expected to provide applicants with information about applicable salary ranges or remuneration conditions before employment negotiations are finalised.

Another notable area concerns employees’ access to pay information. Employees will be entitled to request information regarding average pay levels within their job category, including data broken down by gender. Although individual colleagues’ salaries will not be disclosed, employers will need to be prepared to respond to information requests within prescribed deadlines and to justify any identified pay differences.

The guidance further explains future reporting obligations. Employers with at least 100 employees will be required to submit gender pay gap data and related remuneration information through the reporting framework managed by the State Social Insurance Fund Board (Sodra). Depending on workforce size, reporting obligations may apply annually or every three years.

VDI also clarifies benefits in kind. Certain benefits, including company cars, private health insurance, or other employment-related perks, may need to be included in remuneration assessments if they constitute part of the employee’s overall compensation package. This reflects the Directive’s broad definition of “pay”, which extends beyond base salary.

Although the majority of obligations will only become applicable following implementation of the Directive, the FAQ clearly signals the direction of future enforcement. Employers should use the transition period to review job descriptions, establish objective job evaluation methodologies, develop transparent salary structures, identify and address unexplained pay disparities, and ensure that recruitment and remuneration policies align with the forthcoming transparency requirements. Organisations that begin this work early are likely to be better positioned to manage compliance risks and future reporting obligations.

Our recommendations:

Employers should not wait until the end of 2026 to address pay transparency requirements. Preparing compliant remuneration structures often requires significant time, particularly in organisations with complex job hierarchies or legacy compensation practices.

Companies should consider:

• Reviewing existing job descriptions to ensure they accurately reflect actual responsibilities, required qualifications and levels of accountability.
• Implementing a structured and documented job evaluation methodology based on objective and gender-neutral criteria.
• Assessing whether current salary ranges can be consistently justified across comparable roles and identifying any unexplained pay disparities.
• Reviewing recruitment practices to ensure compliance with upcoming restrictions on salary history questions and transparency obligations towards candidates.
• Evaluating whether remuneration-related benefits and allowances are properly reflected within overall compensation frameworks.
• Updating internal policies, employment contracts and confidentiality provisions that may conflict with employees’ future rights to discuss and request pay-related information.
• Establishing internal processes for handling employee requests concerning pay information and future reporting obligations.