By Attorney Yura Mincheva
The topic of Directive (EU) 2023/970 on pay transparency is currently attracting significant attention. Employers will be required to disclose salary ranges, provide information on remuneration practices, including gender pay gaps, and implement a range of transparency measures.
However, one important aspect is often overlooked in the public debate: this is not merely a reform aimed at preventing discrimination against individuals employed under traditional employment contracts. Article 157 of the Treaty on the Functioning of the European Union (TFEU) enshrines the fundamental right of all women and men in the EU to receive equal pay for equal work, regardless of whether that work is performed under an employment relationship in the strict sense of national labour legislation.
In fact, from a legal perspective, the Directive’s most significant innovation may not lie in the specific tools and measures it introduces, but rather in its scope: extending gender equality in pay to a broader range of relationships between individuals and those who engage or employ them.
The key lies in the Directive’s use of the term “worker.” This concept is no longer confined to definitions contained in national labour laws, which in turn broadens the understanding of what constitutes an employment relationship. The Directive applies to “workers,” including – but not limited to – those engaged under employment contracts or equivalent arrangements, and expressly refers to the interpretation of this concept developed by the case law of the Court of Justice of the European Union (CJEU).
The draft legislation published in Bulgaria generally follows the Directive and introduces the standard mechanisms it requires, including transparency during recruitment, the right to information, definitions, reporting obligations regarding pay disparities, and corrective measures.
It may be concluded that these mechanisms are not, in principle, directed at parties engaging contractors under typical civil-law agreements, where the relationship is based on equality between the parties and the contractor is obliged to deliver a result rather than perform work under hierarchical supervision.
However, the draft legislation does not appear to fully reflect the implications of the CJEU’s established case law. According to that case law, it is sufficient for the factual characteristics of an employment relationship to be present – including in the context of service provision – such as hierarchical dependence, fixed working hours, compliance with instructions, integration into an organisation, and a lack of genuine autonomy. In such circumstances, even a civil-law contract may reflect a relationship that is comparable to employment (rather than a disguised employment relationship) and therefore fall within the scope of EU rules, including those relating to equal pay and pay transparency.
The Commission for Protection against Discrimination and the courts will be required to interpret the concept of a “worker” in accordance with EU law. They will also need to assess “equal work” and “work of equal value” not only across different functions and positions, but also across different contractual models.
Employers, regardless of their organisational structure, should therefore review their policies not only with respect to employees working under employment contracts, but also in relation to other categories of legal relationships that are, in practice, comparable. This will be necessary to develop appropriate internal rules and ensure compliance with the law.
The same considerations apply to the state in its capacity as an employer, including with respect to civil servants governed by the Civil Servants Act. The full text of the article has been published here.
