Fundamental change for employers: ministry has presented draft amendment implementing Pay Transparency Directive

The amendment represents one of the most significant changes in the area of remuneration. The aim of the directive being implemented is to reduce the gender pay gap, which has persisted in the European Union for a long time. The draft legislation therefore strengthens the right of employees and job seekers to access information on pay, whilst increasing employers’ responsibility for ensuring transparent pay practices.

EU member states were due to transpose the directive into their national legislation by the middle of this year; however, the Ministry of Labour and Social Affairs has decided to postpone its entry into force until 2027, with some obligations not coming into effect for employers until 2028.
 

Key points of the draft amendment

The draft amendment imposes a number of new obligations on employers, whilst granting new rights to employees and their representatives. Key changes include:

• the obligation to draw up a policy in which the employer describes in detail the system of employee remuneration, including benefits provided in return for work, and also to draw up a policy on the provision of any other benefits provided to employees (or to regulate these areas in a collective agreement),
   
• the obligation to establish an internal job hierarchy,
   
• a ban on enquiring about job applicants’ wage history,
   
• the obligation to inform applicants of the pay offered before entering into negotiations on the conclusion of an employment contract,
   
• the right of employees to obtain information not only about their individual pay but also about the average pay of employees performing work in the same or a comparable position,
   
• for employers with at least 100 employees, regular reporting to the Ministry of Labour and Social Affairs on pay gaps, with a significant portion of the data being publicly available,
   
• the obligation to address unjustified pay gaps between men and women exceeding five per cent, following a set procedure with the active participation of employee representatives,
   
• a significant expansion of the rights of trade unions and the Public Defender of Rights relating to pay rights,
   
• fines of up to millions of Czech crowns for failure to comply with the new rules,
   
• more effective options for employees to assert their rights to equal pay in court, including the possibility of comparing their pay with that of the employer’s former employees or even with employees of affiliated companies.

There is no time to waste

Although a substantial part of the amendment will not take effect until 1 January 2028 - including, for example, the obligation to report pay gaps and to provide employees, upon request, with information on pay levels - it would be wrong to assume that employers have been granted additional time to prepare. In reality, the key deadline comes one year earlier. From January 2027, employers will be required to implement a transparent pay system for individual job categories (and document it internally) and disclose the offered salary to job applicants.

Furthermore, both the report on pay gaps for the Ministry of Labour and Social Affairs and the notices to employees that employers will be required to prepare in 2028 will be based on data on salaries and wages paid from January
2027. Given the time required, there is not much time left to adapt to the new regulations. To ensure employers do not run into difficulties with the mandatory disclosure of data, it is necessary to start preparations as soon as possible.
 

How to prepare?

The new rules will have a significant impact on recruitment processes, pay policies, internal documentation and the handling of remuneration data. They will affect both employees under employment contracts and those working under agreements on work outside employment. Preparation should include a comprehensive audit of existing pay systems and their review – in particular, establishing clear pay criteria for determining remuneration and all benefits based on objective and non-discriminatory criteria, creating an internal job classification system, drafting a regulatory framework, as well as informing and training employees.

We would be happy to help your company prepare for the new regulations.