Salary transparency reform: what employers need to prepare for

Starting from June 2026, a new salary transparency framework will enter into force in Lithuania, implementing the requirements of the EU Pay Transparency Directive.

However, the key message for employers is not the directive itself, but the fact that the main preparation phase will take place throughout 2026.

The adopted amendments to the Labour Code introduce a phased implementation model. The first stage focuses on reviewing internal remuneration systems and ensuring that salary decisions are based on objective and gender-neutral criteria. The second stage introduces data reporting, transparency and external assessment mechanisms.

In practice, this marks a transition from an internally managed remuneration system to a model that may need to withstand external scrutiny.

The salary transparency reform in Lithuania will enter into force in stages:

• from 7 June 2026, employers must ensure that remuneration is determined based on objective and gender-neutral criteria;
• from 1 January 2027, salary reporting and transparency mechanisms through the State Social Insurance Fund Board (“Sodra”) will become operational.

This transition model is intended to provide employers with a preparation period to review remuneration systems, assess potential risks and ensure practical compliance before salary data becomes externally visible.

From 7 June 2026, employers will be required to ensure that remuneration is determined according to clear, objective and gender-neutral criteria.

The principle of equal pay is not new. However, the new framework significantly strengthens the requirements related to its implementation and substantiation. Having a formally approved remuneration policy will no longer be sufficient. Salary differences must be justified by criteria that are actually applied in practice and that could be explained both to employees and supervisory authorities.

In practice, employers may need to:

• review existing remuneration systems;
• reassess job grouping structures;
• define clear bonus and incentive allocation criteria;
• standardise remuneration practices across departments;
• identify and assess potentially unjustified salary gaps.

The disclosure of salary information will also no longer be restricted by confidentiality clauses where an employee discloses such information in order to defend the right to equal pay for the same or equivalent work.

The salary transparency reform will also affect recruitment processes.

Employers will no longer be allowed to request information about a candidate’s previous salary. The purpose of this restriction is to reduce the transfer of historical pay inequalities into new employment relationships.

As a result, remuneration decisions will need to be based on the requirements of the position itself, the employee’s competencies and level of responsibility, rather than on prior compensation history.

These changes are particularly relevant for HR teams and companies with active recruitment processes.

From 1 January 2027, administrative salary transparency mechanisms will become operational.

Employers will be required to submit data to “Sodra” regarding:

• employee remuneration;
• job groups;
• working time;
• working time schedules and arrangements.

Based on this data, gender pay gaps will be calculated, and part of this information will become publicly accessible within the scope established by law.

At the same time, employees will gain stronger practical rights to request information regarding the average remuneration of employees within their job group.

Therefore, the main risk for employers today is not the data submission process itself. The more significant issue is whether the company’s remuneration system would remain consistent, objective and properly substantiated if assessed externally.

Although some administrative mechanisms will only become operational in 2027, the main preparation burden falls on 2026.

Before the end of 2026, employers should:

• review remuneration systems;
• establish clear job grouping criteria;
• assess existing salary gaps;
• review bonus and incentive practices;
• prepare for potential employee information requests;
• ensure consistent application of remuneration policies.

From 2027 onwards, the regulation will not necessarily create entirely new obligations. Instead, it will make existing remuneration practices visible and measurable.

In practice, the greatest risks usually arise not from the existence of a remuneration system itself, but from inconsistencies in its application.

Common issues include:

• inconsistent salary-setting criteria;
• unclear bonus or incentive structures;
• poorly defined job groupings;
• different remuneration practices between departments or managers;
• internal documents that would be difficult to justify in the event of an employee dispute or Labour Inspectorate assessment.

For this reason, many employers should assess not only whether formal policies exist, but whether remuneration practices are actually implemented consistently in day-to-day operations.

Companies seeking to prepare in advance should consider carrying out a remuneration and employment documentation audit.

Such an audit allows employers to assess:

• whether the remuneration system aligns with the new legal framework;
• whether salary-setting criteria are sufficiently clear and objective;
• whether bonus and incentive systems create unjustified disparities;
• whether job grouping structures are sufficiently consistent;
• whether employment documents would withstand scrutiny in the event of an employee dispute or Labour Inspectorate review.

Early preparation helps reduce both legal and reputational risks before salary transparency data becomes publicly visible.

If your company is preparing for the new salary transparency requirements, now is the right time to assess your remuneration system, salary-setting practices and related internal documentation.

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