EU Pay Transparency Directive

Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms.

The European Pay Transparency Directive addresses the persistent gender pay gap and the lack of information on pay for employees. The directive has been valid since June 2023 and must be transposed into Czech legislation by 7 June 2026, but some basic duties need to be respected now. In this context, we recommend checking the correctness of the relevant processes used in work contracts and collective agreements, as well as in general in communication with employees. The new legal framework strengthens the enforceability of the right to equal pay and shifts the burden of proof to the employer.

The principle of “equal work for equal pay”:

• has been enshrined in the Labour Code for a long time;
• is perceived by employers in rather theoretical terms, something that should not be underestimated;
• pay differentials must be objective, defensible and not discriminatory (the difficulty of the work, the risk involved, the employee’s performance, experience, qualifications obtained, location of the work, etc. must be considered);
• conversely, some factors (gender, age, marital status, union membership, etc.) cannot be taken into account.

It is necessary to respect the minimum wage:

• from 1 January 2026 in the amount of CZK 22,400 gross per month, respectively CZK 134.40 per hour;
• the lower limit of remuneration for work;
• the wages of employees in various positions are based on this amount.

Watch out for additional payments, bonuses and non-entitlement components of wages:

• in addition to the correct setting of basic wages, attention must also be paid to additional payments, bonuses and non-entitlement components of wages;
• this includes, for example, additional pay for overtime, night, weekend and public holiday work; personal appraisals and annual/quarterly bonuses; rewards for superior performance and results.

Maluses and reimbursement of remuneration already paid out (non-entitlement component of wages):

• the option of reducing future remuneration or requesting repayment of remuneration already paid in the event of non-compliance with conditions, breach of duties or detected misconduct;
• the rules must be set out clearly, understandably and unambiguously in advance and must be applied in a non-discriminatory manner.

Wage confidentiality clauses and communication with employees:

• an employer’s employment contracts, directives and internal regulations must be reviewed and wage confidentiality clauses removed from them;
• any such restriction on an employee will now be classified as an equal treatment offence pursuant to the Labour Inspection Act, for which an employer may be fined up to CZK 400,
• until then, confidentiality clauses must not be enforced and an employee’s right to information must be respected;
• it is advisable to prepare a communication strategy and to address any questions from employees and pay comparisons in a transparent manner with a solid logic in remuneration and reasonable explanations for differences.

Preventing wage discrimination in practice:

• remuneration audit – it is advisable to map wages and remuneration under agreements by position, experience, gender, etc.;
• clear and unambiguous job descriptions – in order to compare comparable work;
• wage policy and internal regulations – setting clear written rules for wages, additional payments, bonuses and rewards;
• training of managers and responsible persons – no discrimination in wage increases, allocation of bonuses or wage negotiations may occur.

Upcoming changes:

• employers with more than 100 employees will have to publish a regular overview of remuneration pursuant to the new European directive, for other employers it will be voluntary, a difference in wages between men and women above 5% will have to be explained and corrected within six months;
• employers employing 100–249 employees will be obliged to report every 3 years, starting in June 2028;
• employers with more than 250 employees will be obliged to report annually from June 2027;
• higher transparency in the recruitment process for new employees –  disclosure of starting salary or salary range information in job ads (or otherwise before job interviews), prohibition against asking applicants about salary history;
• internal transparency and employees’ right to information;
• breaches of duties can lead to fines from the labour inspection authority, civil lawsuits by employees for back wages and significant reputational damage.

In case of need, we are naturally available to review employment law documents and deal with specific situations.

Best regards,

Team WTS Alfery, Alfery Hrdina Advokáti