Czech transposition of the Pay Transparency Directive before the Chamber of Deputies

Although the final form of the transposition may still change in the forthcoming stages of the legislative process, the broad direction of the new rules is already clear. They introduce changes that will have a substantial impact, particularly on pay and how it is structured, HR processes relating to applicants, employees, employee representatives and the public authorities, as well as employers’ internal documentation. The new rules are also likely to bring increased inspection activity and a greater number of employment disputes concerning equal pay.

We will continue to monitor legislative developments and explain what new obligations employers can expect in practice. In this article, we look at the current version of the bill and its most important—and most surprising—provisions.

The transposition concerns 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 men and women for equal work or work of equal value through pay transparency and enforcement mechanisms. The transposition bill will primarily affect the Labour Code, but other legislation will also be amended, including the Civil Procedure Code, the Act on the Public Defender of Rights, the Labour Inspection Act and the Anti-Discrimination Act.

New rules – four key areas

The transposition introduces amendments to the Labour Code of varying significance, and employers will undoubtedly find new obligations in the bill that they may not yet have adequately addressed. Below, we highlight four key areas in which the transposition will affect most companies.

• Employee recruitment. Employers will have to inform applicants of the minimum wage or salary payable and any other monetary payments and benefits of monetary value, no later than before the employment contract is concluded. They will also be prohibited from asking applicants about their pay in their current or previous employment. Similar rules are also intended to apply to agreements to complete a job (DPP) and agreements to perform work (DPČ). These rules will apply from 1 January 2027.
• A transparent pay system. Employers will have to set out the forms and components of pay, how pay levels are determined, and how jobs are grouped according to their value in a collective agreement or internal policy. This value must be based on their complexity, responsibility and demands. Objective and non-discriminatory criteria will also have to be established for awarding bonuses, benefits and other monetary or non-monetary compensation. These rules will apply from 1 January 2027.
• Employees’ right to information. Employees will be able to submit a written request once a year for information on their own pay and the average pay of women and men in the relevant job group. Employers will have to respond within two months and inform employees of this right at least once a year. These rules will apply from 1 January 2028.
• Reporting on pay gaps. Employers with at least 150 employees will have to prepare a report on gender pay gaps by 30 April of the relevant year. The reporting frequency will depend on the size of the employer: employers with 250 or more employees will report annually, while those with 150 to 249 employees will report once every three years. This reporting requirement will apply from 1 January 2028. From 2031, the three-year reporting cycle is also intended to apply to employers with 100 to 149 employees. If an employer identifies a gender pay gap of at least 5% in any job group, cannot objectively justify it and does not remedy it within six months, it will have to carry out a more detailed assessment of the causes and take corrective measures.

The bill also provides that:

• employee representatives (typically trade unions) will be involved in assessing pay gaps and taking corrective measures;
• agency workers will be covered by the user undertaking’s pay system and, from 2031, are also intended to be included in its reporting;
• breaches of certain obligations will be subject to fines, with the highest reaching up to CZK 1 million.

What surprised us most about the Czech transposition?

• In some respects, the Czech bill is more restrained than the Directive. In recruitment, the Directive requires information on the initial pay or pay range to be provided to applicants in time for transparent negotiations. By contrast, the Czech bill only requires disclosure of the minimum pay level, no later than before the employment contract or agreement is concluded. Applicants may therefore not learn this information from the job advertisement or before a potential interview.
• The proposed rules on employees’ right to information are also narrower. Employees will be able to request pay information only once per calendar year, even though the Directive does not expressly impose such a general restriction.

What happens next?

The bill now awaits consideration by parliamentary committees and amendments proposed by members of the Chamber of Deputies, which could still significantly change its current form.

What can employers do now?

• We recommend focusing as soon as possible on establishing a pay system that covers all the elements required by the amendment —it must include the forms and components of pay, how pay levels are determined, and how jobs are grouped according to their value.
• In our experience, many employers already have some form of pay system. However, a key new obligation that needs to be addressed in good time is grouping jobs according to their value, which should be based on the complexity, responsibility and demands of the work concerned.
• For this grouping, we recommend developing a uniform job evaluation methodology and properly documenting both the criteria used and their application, as well as the reasons for assigning individual jobs to the relevant groups. This approach is important for applying the system consistently and for defending job classifications and related pay differences in any disputes or inspections.