Pay transparency: legislation awaits approval, but preparations should not

The principle of equal pay for equal work or work of equal value already applies under Czech law, as does the prohibition of discrimination against employees on grounds of sex. However, the new legislation will significantly strengthen their enforceability in practice. Employers will have to make their remuneration rules more transparent, among other things by adopting a mandatory internal policy setting out in detail the rules for determining pay and awarding bonuses and benefits.

Employers will also be required to provide remuneration information to employees and job applicants. In addition, employers with 100 or more employees will have to report pay differences between women and men to the state on a regular basis. This will involve more than simply disclosing amounts: the bill requires remuneration systems to be based on clear, objective and gender-neutral criteria. Employers will therefore need to be able to explain which jobs are of equal value, why individual employees are paid differently and whether those differences are genuinely justified.

A significant portion of the obligations will apply to all employers regardless of size. Delaying preparations may therefore result not only in time pressure but also in a risk that a company will be unable to substantiate and defend its remuneration arrangements.
 

What should employers do now?

• Conduct a readiness audit and map whether and how the job hierarchy is structured, as well as all remuneration arrangements and related decision-making processes.
   
• Develop or review the job hierarchy and create clear categories of work of equal value based on objective criteria.
   
• Analyse pay differences, identify their objective causes and, where there is no justification, prepare a remedial action strategy.
   
• Establish a clear remuneration structure, including rules for basic pay, variable remuneration, benefits, and career or pay progression.
   
• Prepare or update internal documentation so that the rules are transparent, consistent and compliant with the new regulatory requirements.
   
• Design processes for providing information to employees and job applicants.
   
• Get ready for reporting to the state and verify whether HR and payroll systems can produce the data in the required format.
  
   

The first data will be submitted for January 2027

Although the obligation to provide information to employees and the reporting obligation towards the state will not be ‘activated’ until 2028, they will concern payroll data for 2027. The state will obtain much of this data through the single monthly employer report, starting with the data for January 2027. The legislation therefore leaves no scope for retrospectively ‘tidying up’ the data.

This is precisely why preparations should begin as soon as possible. The sooner employers identify weaknesses in their data, processes or documentation, the more time they will have to address them before they begin complying with the new obligations in practice. We would be pleased to assist you in preparing for the new legislation.