By Eglė Gliaudelytė, Firm: cobalt.legal
New rules in Lithuania require employers to provide clear and unambiguous salary information in job advertisements. This article sets out dos and don’ts for employers.
All businesses seek to attract motivated specialists onto their teams. However, not every employer devotes time to deepening its knowledge on how to prepare a job advertisement correctly. According to changes in employment laws that came into effect on 27 July 2019, every job advertisement must include information on the salary offered or give the salary range the organisation is willing to pay to new hires. This latter requirement still raises unsolved practical questions and may cause administrative liability if poorly followed. How can employers avoid non-compliance when publishing an advertisement for a job?
Understanding the importance of the new regulation
The obligation to publicly announce salary when advertising job positions has been incorporated in the Labour Code of the Republic of Lithuania (‘LLC’) with the aim of increasing transparency in employees’ pay and contributing to the implementation of the constitutional right to fair payment for work.
Currently, flexible remuneration allowing employers to reward employees in a way that best suits their needs is praised for being one of the biggest motivators for employees. However, when it becomes common practice to keep salary information secret up until negotiations with the job applicants, the employer’s bargaining power rises while causing confusion regarding standard salaries in the labour market. When employees have no alternative but to rely on the employer’s assertion that the pay for job is in line with market prices, this can hardly be considered as fair. The new LLC requirement brings some clarity and perception to candidates seeking to gauge the prevailing salaries in the employment market.
There is no question that easily accessible information on the salaries organisations are willing to pay for the same job allows applicants to evaluate whether the starting salary reaches their expectations and whether to apply at all. As a result, it saves time for both employees and employers.
It also strengthens the bargaining power of employees, as they will know the bargaining limits when it comes to settling on a salary at interview. It also contributes to eliminating the disparity between pay for women and men for the same job, which still exists.
It is anticipated that job advertisements will become more accurate, meeting applicants’ need to be adequately informed about a job position beforehand. For this reason, the information provided in the job listing should be unambiguous and must not mislead a potential employee.
Guidelines to follow
More than several months following the change described above, employers are still making mistakes when posting vacancies for job positions. It is important to take into account that failure to comply with employment law can easily result in administrative sanctions, such as an obligation to terminate a breach and/or a fine on the head of the organisation or other responsible individuals of between EUR 80 and EUR 880.
To avoid any negative consequences from posting a job advert, it is important to understand what is required of employers under the relevant amended LLC provision.
- Firstly, a job ad should include the information on the base (tariff) salary offered, excluding the variable part of the salary. In particular, the salary indication must show a fixed hourly rate, monthly salary or for a civil service role, an official salary.
- Employers are allowed to indicate the specific salary that is being offered or, alternatively, to give a range.
- It should also be clear whether the offered amount before tax (gross) or after tax (net).
- It is not enough to let job seekers know the lower limit of the probable salary or get around the mandatory LLC obligation by indicating the maximum salary limit by, for example, writing ‘from EUR X (net) without limits’ or ‘…as much as you can get through your hard work’, or similar. Even though this might reflect the actual approach of the organisation, it contradicts the LLC provision. The highest salary point available for the same job position in the organisation must be specified clearly and without any qualification.
- New businesses usually cannot afford to pay team members a competitive amount right away. This can be a downside of the LLC requirement. However, to highlight the best qualities of an organisation, in addition to salary, the job ad can include other different benefits or advantages that an employee will be entitled to get. These could include a, flexible working time regime, the ability to work remotely (telework), etc.
What to avoid in a job ad
Significantly higher salary
The flipside of the positive aspirations of the LLC amendment is that employers will find it difficult to advertise more competitive salaries than those paid to current employees working in the same position. A useful tip for employers is not to overreach when trying to attract employees with bigger salaries, because if current employees become aware that the opening offers a bigger salary than they are getting, it can easily create a difficult atmosphere in the organisation.
Extremely wide salary ranges
The State Labour Inspectorate has noticed that some of the listed job advertisements show disproportionally wide ranges of offered salaries that vary by hundreds or even thousands of euros for the same working position in the same workplace.
Even though this is not forbidden and might keep competing organisations in the dark about the salary policy in a particular organisation, it can give a bad impression to job seekers. If the salary range advertised is extremely wide, the employer should not be surprised when job seekers are suspicious of organisations listing these types of job opening and do not even apply.
As practice shows, transparency and salaries paid on time are qualities that are greatly appreciated in an employer. So, when announcing an opening, remember to evaluate whether your aspiration to keep proposed salary secret from competitors should outweigh the ambition to appear a desirable employer in the eyes of job seekers.
In fact, when the job advert offers too wide a range of salary, this information is neither accurate nor useful for job seekers. For this reason, on 19 September 2019, the Lithuanian Parliament (Seimas) registered a draft amendment to the legal requirement in question, which proposes incorporating acceptable limits on the salary range that can be indicated in a job advertisement into the LLC.
It has been proposed that the lower limit of the range should be less than 0.7 of the upper limit specified in a job listing; the draft amendment is still under consideration. However, this could be challenged. It could be seen as too strict on businesses that that adopting the approach that an employee with less experience can gradually work his or her way up to the upper limit, which could be several times bigger than a lower limit in the same organisation.
In brief, to avoid any negative consequences for failure to comply with employment law, the salary indication given in a job advertisement should be clear and unambiguous. Employees appreciate it when salary information is communicated upfront. Regardless of the salary offered in an advertisement, job seekers can be attracted by an employer’s openness to transparency and by other benefits that correspond to their individual needs.