Czechia prepares equal pay law: companies will have to explain gender pay gaps

Czech companies have only a few months left to prepare for new pay rules: the government plans to introduce an amendment to the Labour Code from 1 January next year, transposing the EU's Pay Transparency Directive into Czech law. Under EU rules, Czechia was supposed to adopt the corresponding legislation by 7 June this year, but the bill has still not been approved.

Under the new requirements, employers will no longer be allowed to ask candidates about their salary at a previous job and will be obliged to disclose the proposed salary range in advance. In addition, companies will have to record pay differences between men and women holding the same positions. "The basic principle is simple: employees should receive equal pay for equal work. In practice, this means companies must be able to clearly explain and justify any pay differences," explained tax consultant and managing partner at EKP Advisory Jan Tecl.

Employers will have to prove that employees in comparable positions receive comparable pay, including bonuses and other benefits. Companies with more than 100 employees will be required to regularly report on the gender pay gap. "Given the complexity of the directive's requirements, companies need to start now. Waiting for the final version of the Czech legislation is risky," noted Tomáš Jurčík, director of Comp&Ben, an association specialising in corporate pay issues. According to him, delays could expose companies to penalties and the need to retroactively top up salaries.

The Czech Ministry of Labour and Social Affairs says it aims to minimise the burden on employers. "We have prepared a version that could improve the existing system without creating a significant negative burden," said Labour and Social Affairs Minister Aleš Juchelka (ANO).

According to Eurostat, Czechia currently has one of the highest gender pay gaps in the EU — around 18%. Companies that have so far relied on various pay exceptions and fail to adapt to the new rules risk fines running into millions of crowns, as well as the risk of having to pay salaries retroactively, according to consulting firm BDO. BDO expert Ivona Tajšlová expects a wave of inquiries and requests for clarification once the new rules take effect, and does not rule out an increase in lawsuits. "For a long time, the number of discrimination lawsuits in Czechia has been low. But this could change, as employees will have access to more information and will find it easier to establish the actual facts," she noted.

According to the explanatory memorandum to the bill, an employer will be obliged to provide, upon a written request from an employee, information on the average salary of employees in a similar position — broken down by gender — within two months. The employee will also be able to request clarification or corrections if the data provided turns out to be incomplete or inaccurate.

Employers are not thrilled about the new obligations. "Equal pay for women and men is a legitimate and correct goal, but the path to it must be reasonable, proportionate, and above all sustainable in the everyday operations of companies," said Zdeněk Zajíček, president of the Czech Chamber of Commerce, calling for a minimalist approach when transposing the directive, without adding requirements beyond European standards.

Experts emphasise that the new directive is no mere formality. "In essence, it represents a significant shift in the procedural position of employers in discrimination disputes and will affect all employers regardless of size or number of employees," noted lawyer Tomáš Britz of consulting firm Rödl & Partner Česká republika. According to him, employers will have to prove which criteria justify pay differences between employees performing the same work or work of equal value.

A survey by the Platy.cz service showed that employees perceive a pay system as fair precisely when they consider it transparent. According to the study, 51% of respondents have almost no information about salaries, less than a fifth know the salary ranges for their position, and only 2% have access to data on the gender pay gap. "Pay fairness isn't just about the figure on a payslip. It's important for people to understand the logic behind the system," believes Platy.cz analyst Miroslav Dravecký.

Around Prague, based on reporting by denik.cz