Definition (ESRS)
Definition (ESRS)
Pay: The ordinary basic or minimum wage or salary and any other remuneration, whether in cash or in kind which the worker receives directly or indirectly (‘complementary or variable components’), in respect of his/her employment from his/her employer. ‘Pay level’ means gross annual pay and the corresponding gross hourly pay. ‘Median pay level’ means the pay of the employee that would have half of the employees earn more and half less than they do.
Adequate wage: A wage that provides for the satisfaction of the needs of the worker and their family in light of national economic and social conditions.
Good to know
Good to know
Minimum wage ≠ Adequate wage
Adequate wage in the EEA
To determine adequate wages or minimum wages in the EEA, Directive (EU) 2022/2041 of the European Parliament and of the Council on adequate minimum wages in the European Union is used. Member States had to transpose it into national law by 15 November 2024 at the latest. When assessing adequate minimum wages, the Directive relies on international reference values:
60% of the gross median wage and 50% of the gross average wage (these data can be taken from the European Labour Force Survey)
indicative reference values at national level
Example: If the gross median wage in country X is EUR 1,500 and an employee of the undertaking earns less than EUR 1,500 gross, the pay does not correspond to an adequate minimum wage.
Digression – Minimum Wage Directive: Directive (EU) 2022/2041 does not aim to introduce a single statutory minimum wage across Europe. Instead, it promotes the strengthening of social partnership structures for setting wages. Member States whose collective bargaining coverage rate is below 80% must develop action plans to increase collective bargaining coverage. In Austria, where collective agreement coverage exceeds this threshold, there is no obligation to draw up such action plans.
Adequate wage outside the EEA
An adequate wage outside the EEA is determined in the following order:
Primary basis: The wage level that is defined by existing international, national or subnational laws, official standards or collective agreements, and that is required for an adequate standard of living, takes priority.
Alternative basis: If no such rules exist, the undertaking uses national or subnational minimum wages that are set by law or by collective agreement.
Supplementary support: Where neither laws nor minimum wages are available, recognised platforms and tools can be used for support. One example is the IDH Benchmark Finder, a tool of the Roadmap on Living Wages project. It offers both free and paid resources to help undertakings determine adequate pay.
This article has been machine translated. In case of errors, please contact [email protected].