New Salary Rules: Methodology Presented for Employers

The first piece of the puzzle called the amendment to the Labor Law has seen the light of day in order to implement the European directive on pay transparency. Based on the requirements of the EU Directive on pay transparency, the process of harmonizing the Labor Law is underway, which will introduce a series of new obligations for employers. On this occasion, the Ministry of Labor, Pension System, Family and Social Policy, with the support of the European Bank for Reconstruction and Development, has prepared methodology for job evaluation, specifically aimed at small and medium-sized enterprises. The methodology was presented on Wednesday at the European Commission’s Representation in Zagreb.

As Zrinka Ujević, head of the European Commission’s Representation in Croatia, stated in her opening remarks, the issue of pay transparency is very important for the European Commission, as it falls under the construction of a Union of Equality. – Some postulates – equal pay for equal work – are already contained in our foundational treaties. When this directive is adopted, we hope that the pay gap between women and men, which still exists, will be reduced. At the level of the European Union, this gap is 11.7 percent, and in Croatia 6.6 percent, which means we still have work to do – emphasized Ujević.

Free Application

Specifically, this refers to an application that will be available to all employers on the website of the relevant ministry. Minister Alen Ružić told the gathered journalists that the application is particularly valuable for smaller employers, as it allows them to convey the principles promoted by the European Institute for Gender Equality in the most credible and straightforward way, which form the basis of the pay transparency directive. Namely, in addition to the need to report the amounts of salaries, the regulation also requires the harmonization of jobs, i.e., their evaluations. This methodology serves that purpose.

The assessment will be based on objective criteria, such as skills, responsibilities, work effort, and working conditions. These four mandatory criteria are elaborated into 17 sub-criteria, which form the basis for three models intended for small, medium, and large enterprises. Thus, small entrepreneurs will choose the sub-criteria by which they will conduct evaluations, while medium-sized entrepreneurs will have 14 predetermined sub-criteria for evaluation. Large entrepreneurs will have to apply all 17 sub-criteria.

When asked whether the new directive will put significant pressure on small and medium-sized enterprises in terms of implementation costs, Ružić stated that the Ministry has made preparations to keep implementation costs as low as possible. Reporting will be mandatory for employers with 100 or more employees, while for smaller companies, it will be on a voluntary basis. Regarding deadlines, Ružić says that the start date for implementation is still open and will be discussed after public consultation.

– We allow ourselves the freedom of national autonomy to implement the European directive in a way that will primarily be in the interest of our economy, the sovereignty of the Republic of Croatia, which will encourage new values and reduce gender discrimination against our citizens, but also strengthen the economy, and certainly not as some imposed measure by which anyone is putting us in line – emphasized Ružić.

Implementation Begins at Končar

With the amendments to the Labor Law, along with the directive on pay transparency, the directive on platform work will also be transposed into national legislation. The deadline for the pay transparency directive was June of this year. – We are a bit late here, but we do not consider that important given that quality is very important. Only five EU member states have transposed this directive into legislation. I am personally in contact with the European Commission, and this dynamic is very satisfactory, especially due to the quality of the adaptation of the directive to the Croatian legislative framework. The deadline for the second directive, on platform work, is by the end of the year, and we are also within formal deadlines – emphasized Ružić.

The methodology was developed with the support of the European Bank for Reconstruction and Development (EBRD). Regional Director of EBRD Miljan Ždrale explained how this institution wanted to help Croatia in implementing the pay transparency directive primarily due to the importance of human resources on which the competitiveness of the economy depends. EBRD recently invested in Končar, and Ždrale announced that the job evaluation methodology will be applied in practice for the first time in that company.

– Pay transparency and equal opportunities are key to the competitiveness of Končar itself, as a flagship of the Croatian economy, especially in the energy sector – said Ždrale.