The four main changes:
- Disclosure of salary range: Employers will be obliged to disclose the expected remuneration or its range to the candidate at the latest before the first job interview.
- Ban on asking about previous salary: Going forward, enquiring about a candidate's previous salary during the recruitment process will be explicitly prohibited.
- Right to discuss pay: Employers may not forbid employees from discussing their own income.
- Principle of equal pay: The Employment Contracts Act will stipulate more clearly than before that women and men must receive equal pay for equal work or work of equal value.
As one of the most significant changes, employers will be required to disclose the expected salary or salary range to candidates no later than before the job interview. The information must be provided in a manner that allows the candidate to prepare for negotiations or, if necessary, withdraw from the process to save both parties' time. The disclosed figure is not ultimately binding on the employer, as circumstances may emerge during recruitment that alter the final amount. Employers will also be prohibited from asking candidates about their salary at their previous workplace.
According to Keldo, the gender pay gap in Estonia has decreased to 13.2% over the last ten years, but it remains high. „Since a large part of this gap has so far been unexplained, by increasing transparency we are helping to specifically reduce hidden discrimination and ensure that pay is determined based on objective criteria, rather than negotiating skills,“ said Keldo.
„A misconception has spread in public debate that the state is against pay transparency. This is certainly not the case; Estonia supports the aim of the Pay Transparency Directive to reduce the gender pay gap. At present, we are moving forward with those changes that increase transparency and provide the employee with more information and protection.“
He added that the obligations requiring the most additional work from employers are being put on hold for the time being. „These are primarily the creation of a detailed pay structure, regular reporting for larger employers, and the associated explanatory obligations. The intention is to discuss with the European Commission how to implement these in a way that minimises the increase in companies' administrative burden.“
Furthermore, employers will lose the right to forbid employees from discussing their wages. In practice, there have been cases where attempts were made to keep salary figures as trade secrets, but under the new rules, employees will always have the freedom to discuss their income.
The amendments will also insert into the Employment Contracts Act, more clearly than before, the principle that women and men must receive equal pay for equal work or work of equal value. The sameness or equal value of work must be assessed based on the skills, effort, responsibility, and working conditions required for the job, alongside additional criteria if necessary.
The 'Pay Mirror' (Palgapeegel)
The Palgapeegel (Pay Mirror) tool will also be established in law, aiming to help employers voluntarily analyse the pay gap within their enterprise, thereby increasing employer awareness and supporting the development and use of fair remuneration systems.
According to Keldo, the gender pay gap vividly reflects prevailing injustice in society, and employers play a key role in reducing it. „Often, disparities in pay do not stem from a desire to discriminate, but rather from a lack of sufficient analysis and awareness. The Pay Mirror is designed precisely to offer managers a convenient and automated way to assess their organisation's pay systems and spot potential bottlenecks early on,“ stated the Minister.
The Pay Mirror demonstrates whether, and to what extent, a gender pay gap exists within an organisation. The application provides an overview of the state of gender equality in the workplace, allowing users to monitor the gender pay gap, mean and median salaries, as well as the gender composition of employees and their distribution across different roles.
All employers with a sufficient number of staff (at least three women and three men) can use the Pay Mirror in the Labour Inspectorate's self-service portal. It is completely voluntary for employers, and access to the data is restricted solely to the employer and their authorised representative. The Pay Mirror's metrics are based on data already submitted to the state and are calculated by Statistics Estonia. Employers do not need to input or submit anything extra to analyse their enterprise. The data is processed only upon the employer's request, meaning that if an employer does not use the Pay Mirror, the metrics are not calculated. The information visible in the application is neither saved nor stored.
The gender pay gap is defined as the difference in the average earnings of men and women, indicating the percentage by which women are paid less than men on average. The gender pay gap is formed by the combined effect of several factors, including gender stereotypes and segregation in the labour market. An organisational pay gap can be caused by the unequal distribution of men and women across different roles or career levels—for example, if there are more men among executive staff. On the other hand, a pay gap may also be indicative of unequal treatment.
