The right to equal pay for the same work or work of equal value is one of the fundamental rights of employees, protected by both domestic legislation and international standards. In Montenegro, this right is regulated by the Labor Law, while judicial practice contributes to its interpretation and application. Furthermore, the case law of the Court of Justice of the European Union plays a significant role in shaping the legal framework, providing guidelines for the protection against discrimination in terms of wage equality.
Legal Framework
The previous Labor Law that was in force before the adoption of the currently valid Labor Law, provided the principle of equal pay in Article 77, paragraph 2, ensuring that a male or female employee was entitled to equal pay for the same work or work of equal value performed for the employer. This legal provision aimed to protect employees exclusively in cases of gender discrimination. However, Article 99, paragraph 2 of the current Labor Law stipulates that employees are guaranteed equal pay for the same work or work of equal value. Work of equal value is defined as work requiring the same: (i) level of education or professional qualification, (ii) degree of responsibility, (iii) level of skills, (iv) working conditions, and (v) work performance. Although wage disparity is often associated with gender discrimination, it is important to emphasize that the principle of equal pay, as defined in the current Labor Law, is significantly more complex.
Employees’ Rights in Case of a Violation of the Right to Equal Pay for the Same Work (or Work of Equal Value)
Pursuant to Article 99, paragraph 3 of the Labor Law, an employee who believes that their right to equal pay for the same work or work of equal value has been violated, has the right to compensation for damages in the amount of the unpaid portion of their salary. This means that the lawsuit would be based on seeking compensation for material damages arising from the employment relationship in the form of the difference between the plaintiff’s salary and the salaries of employees in comparable positions. A lawsuit may also include a request to annul the employer’s decision or agreement that contradicts the principle of equal pay for the same work or work of equal value, in accordance with paragraph 4 of the cited article.
If discrimination is based on any legally prescribed grounds, which is often the case in practice, the existence of discrimination is examined using the so-called discrimination test. The court will assess whether: (i) there is less favorable treatment towards the person claiming discrimination (e.g., unequal pay), (ii) the different treatment is based on personal characteristics, and (iii) the treatment differs compared to another person or group of persons who do not have those personal characteristics.
If the employee (plaintiff) provides the court with facts that at least suggest the existence of direct or indirect discrimination, the burden of proving that discrimination did not occur shifts to the employer.
Criteria for Determining Work of Equal Value
Working in the same jobs can be considered work of equal value; however, work of equal value is also considered to be a job of equal importance in different workplaces. The criterion of "equal importance" is assessed based on key elements necessary for performing a specific job, such as the required level of education, job complexity, working conditions, and degree of responsibility. Work skills are considered different if employees possess different training, levels of knowledge, autonomy in work, and experience necessary for particular positions, which directly affects job performance quality. Therefore, when evaluating wage inequality, one of the necessary conditions is that the compared jobs must be comparable, meaning that the work performed in different positions must align in terms of these key elements.
Court of Justice of the EU issued a ruling on June 26, 2001, in C-381/99 in which it raised questions concerning the principle of equal pay for men and women, regarding the difference in remuneration paid by the employer – a bank – to the claimant and her male colleague. It was decided that, although the two disputed positions were initially considered work of equal value, the claimant’s male colleague performed more significant functions, as he was responsible for important clients and had the authority to enter into binding contractual obligations on behalf of the bank. This authority was not granted to the claimant, who had less contact with clients, which explains why she received a lower salary supplement compared to her male colleague. One of the conclusions reached by the Court of Justice of the EU in this ruling is that when an employer differentiates employees' pay, they are obliged to justify this difference objectively. Accordingly, a higher degree of responsibility associated with certain positions constitutes an objective criterion for differentiating employees' salaries.
A justified difference in wages can also be explained by different working conditions. For example, companies operating a chain of supermarkets may experience higher sales in coastal areas during the summer due to a significant increase in the number of tourists. As a result, employees working on the coast bear a greater degree of responsibility since increased sales volume leads to a higher workload and a greater risk of errors. Since, in such a scenario, employees in different regions perform essentially the same work for the same employer but under significantly different working conditions, an objective criterion for wage differentiation may exist without violating the principle of equal pay. As another example, an employer who has waiters employed in two hotels (one with 3 stars and the other with 5 stars) may justify different salaries based on the different working conditions and the level of service required in these two hotels. On the other hand, the difference in hotel categories would not affect the working conditions of an accountant, meaning that the employer would be obliged to pay accountants in both hotels the same salary, provided that other criteria are met.
It is important to emphasize that the principle of equal pay for the same work or work of equal value is not merely a matter of fairness but also a legal obligation for employers. Compliance with this principle helps prevent potential disputes with employees and establishes a transparent pay system based on objective criteria. From the employees' perspective, implementing this principle ensures protection against discrimination and fosters motivation through a sense of fair compensation for their work.
Given that the burden of proving the justification for wage differences rests with the employer, the need for clear and consistent wage policies is further highlighted. Finally, in the modern business environment, adherence to legal regulations is not just an obligation but also a strategic advantage that contributes to company stability and sustainability, strengthening employee trust and overall market competitiveness.
By Marija Zivkovic, Partner, and Mina Coguric, Associate, JPM & Partners
