Labour Law and HR Equal work, different pay. More than 200,000 as payment to employee for wage discrimination in organisation
Pay discrimination in the organization – ruling in favor of the employee
Preventing wage discrimination is a challenge that, despite growing awareness, is still sometimes ignored by many employers. At the same time, the jurisprudence of the Supreme Court regularly reminds us that wage differentiation without clear, objective criteria can be considered a manifestation of discrimination. One of the key rulings in this respect is the judgment of the Polish Supreme Court of 22 November 2012. (ref: I PK 100/12).
Key scope of duties?
In the analysed ruling, the scope of the employee's duties went significantly beyond what was specified in his employment contract. The employee claimed that he actually performed a job with a more sincere scope of duties, receiving a salary lower than that granted to other managerial positions.
The Supreme Court compared the employee-plaintiff's duties with those of other employees in managerial positions, in particular the finance director, and found that both employees performed work of ‘equal value’ within the meaning of Article 183c § 1 and 2 of the Labour Code, meaning that their work should be remunerated equally.
Importantly, the court noted that not only were the responsibilities of the employee-plaintiff comparable to those of the finance director, but also the placement of the positions at the same level in the company's organisational structure (reporting to the same people), as well as the education and work experience of both employees.
Non-financial allowances as part of remuneration for work
In the case at hand, the Court also noted the issue of non-financial benefits accruing to employees in managerial positions.
The employer had a policy whereby managerial employees, regardless of their remuneration, received additional non-financial benefits in the form of rented villas. The president of the board of directors and the finance director also benefited from the opportunity to live in a villa, residing in accommodation paid for by the employer. In addition, they used company mobile phones and cars to run private matters on their days off. They were also provided with individually paid medical care and daily meals in a separate room. The other employees did not receive any additional non-financial benefits.
The Supreme Court has made it clear that, when determining whether there is wage discrimination in a company, it is also necessary to consider whether the individuals concerned benefit from, for example, a car, a flat and a company telephone. The difference in the amount of remuneration awarded to the employee-plaintiff should therefore include not only the value of the basic salary, but also all the additional benefits that the employee-plaintiff was not allowed to use, but which the finance director was entitled to.
Equal treatment principles
Although the responsibilities of the employee- plaintiff and the finance director differed in name and specificity, the employer placed both functions at the same level in the organisational structure, which meant that the plaintiff's work should be remunerated in a similar manner. In practice, however, the differences in pay were drastic.
According to Article 183a § 1 of the Labour Code, every employee should be treated equally in terms of remuneration, regardless of nationality, gender, age or education.
In the case at hand, the pay gap was so significant that the court awarded the employer compensation of 225,502.00 PLN against the employee-plaintiff.
Conclusions for employers
The judgment is an important reminder to employers of the need to respect the principle of equal treatment of employees. Wage discrimination, even if subtle and resulting from unconscious actions, can lead to serious legal consequences.
The Supreme Court has thus highlighted the basic duties of employers:
- Transparency of remuneration: Remuneration should be based on objective criteria such as scope of duties, responsibility, qualifications and experience. People with similar experience, qualifications or responsibilities should receive equal pay.
- Equal access to benefits: Additional benefits such as company housing, phones or cars should be granted on the basis of objective criteria.
- Documentation of duties: In the case at hand, the lack of a written definition of the plaintiff's duties in the new position contributed to disputes, which is a warning to employers to precisely specify the duties of employees.
Following the principle of equal treatment not only prevents potential legal disputes, but also promotes a healthy and fair working environment. If you need assistance with equal treatment in employment or other employment law issues, our team will be happy to assist you in reviewing your organisation's remuneration policy and implementing appropriate procedures.
