Are you negotiating on salary with a new colleague in Hungary? Even if salary is subject to free negotiation, a higher salary for the same work can cause a tension in wage levels. In our short article we summarize the fresh decision of the Curia which can serve as a compass in relation with the applicability of the equal pay principle.

  1. The baseline

The claimant employee worked since 2006 at the defendant, first as a rapporteur and from 2013 as the secretary of the CEO. The employer hired another secretary to the CEO in 2013 who was much younger and had less experience than the claimant.

Both employees' highest education was baccalaureate and the younger employee studied public administration management, but she has not obtained her degree because of the lack of her compulsory language exam.

The tasks of the secretaries were the same, nevertheless the young one could perform her task more efficiently due the innovations introduced by her.

  1. The tension

The bomb exploded when the employer, in fact because of her offensive statements about the young colleague, fired the claimant with extraordinary dismissal.

The claimant sued the employer for unfair dismissal and she also claimed that the employer has infringed the principle of equal treatment.

Indeed, the claimant stated that she was discriminated because of her age when the employer declared the salary of her younger colleague who worked in the same position and had the same qualification as her, HUF 100.000 higher than the claimant's salary.

  1. The decision of the courts

The lower courts, although they established that the dismissal was unlawful, has not shared the claimant's point of view in relation with the discrimination. The labour court declared that when deciding this question, the equal pay principle stand against the principle of the freedom of contract.

The equal pay principle, according to the labour court, does not mean that the salaries of the employees working in the same position should be identical. If it was the case, the provision that the parties can freely agree about the salary in the labour contract, would become meaningless.

The labour court established that the difference between the salaries of the claimant and the younger colleague cannot be considered as such which would cause the infringement of the equal pay principle. The salary of the younger colleague was the result of a negotiation, further the employer raised the claimant's salary with 37% so that the difference between the wages could decrease.

  1. Decision of the Curia

The Curia also emphasized that based on the principle of the freedom of contract that parties can freely decide about the salary, taking into consideration certain limits. The negotiation on salary cannot only influenced by the labour market situation and the demand and supply approach, but also by the equal pay principle. The employer must pay attention that he does not differentiate between the salaries of employees working in the same position in a way, which would infringe the equal pay principle.

According to the Curia, the claimant proved it probable that the employer caused her detriment because of her age as a protected characteristic when she was paid significantly less salary than the younger colleague working in the same position. Against this probability, the defendant should prove that the difference between the wages can be justified with objective circumstances.

Nevertheless, the Curia concluded that the defendant could not prove that the difference between the salaries of the employees working in the same position can be justified by the quantity of work, intellectual effort or other objective reason. The hope of the defendant that the younger colleague would work more efficiently, cannot be considered as a factor supporting the difference between the salaries since this would only become known during the actual performance. That is why the Curia established that the employer declared the claimant's salary in a way which has infringed the principle of equal treatment.

  1. Lesson learnt

The lesson you can learn from the case is that you shall pay particular attention to the principle of equal treatment in relation with employees being in the same situation, for example having the same position or performing the same tasks.

The equal pay principle is not absolute, that means that there could be objective reasons which would justify the difference between the salaries. This can be the case for example if one colleague has exceptional professional knowledge, higher qualification or even better language skills.

However, assumed characteristics, which are unknown when hiring the employee, for example that the new joiner would perform better, cannot justify the difference.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.