Is Your Company Ready for Pay Transparency?

Many companies currently set wages on the basis of historical management decisions or long-established practices. However, the forthcoming amendment to the Labour Code will require employers to explain and justify why employees in comparable positions are paid differently.

This is not merely another administrative obligation. Many companies will, for the first time, need to systematically document the rules governing remuneration, benefits and the classification of employees into job categories.

More Information at the Recruitment Stage

One of the first changes will affect the recruitment process itself.

Under the proposed rules, employers may not seek information about an applicant’s previous pay. The aim is to prevent historical pay disparities from carrying over from one employer to another.

Employers will also likely be required to inform applicants of the salary or salary range offered before contract negotiations begin. How much information must be provided about bonus and benefit components of remuneration is also under discussion. The final form of this obligation has not yet been settled.

For employers, this means reviewing recruitment processes and the forms used.

Mandatory Remuneration System

The most significant change will likely be a new obligation to establish a transparent remuneration system covering not only employees in an employment relationship, but also individuals working under agreements for work performed outside an employment relationship.

Employers will have to classify individual types of work or job positions into groups according to their value, assessed primarily by the complexity, responsibility and demands of the work performed.

The aim is not identical pay for all employees in similar positions. However, employers must be able to explain and justify the differences between individual employees’ pay and the criteria on which it is based.

For many employers, this will represent a fundamental change. At present, it is often enough to agree on pay in the employment contract or set it by a pay statement. In future, however, employers will need to document remuneration rules systematically.

Transparency Will Also Apply to Benefits

The new rules will not apply to basic pay alone.

The same emphasis on transparency will also apply to bonuses, benefits and other monetary or non-monetary compensation. Employers should be able to substantiate which benefits they provide, who is entitled to them and the rules under which they are awarded.

This is precisely the area where many companies are finding that their rules developed gradually and were never formally documented.

New Employee Information Rights

New employee information rights will also be a significant development.

Employees will be able to request information concerning their own remuneration and data on the average remuneration of employees classified in the same job group.

In practice, employers will therefore need to establish in advance a methodology for creating individual employee groups while also protecting personal data.

What Employers Should Do Now

Although the legislative process has not yet been completed and some questions remain open, most preparatory steps can already begin.

A sensible starting point is for employers to put their existing remuneration systems in order. We recommend taking an inventory of all components of remuneration and benefits, reviewing job descriptions and verifying who decides on pay, bonuses or exceptions, and under what rules.

At the same time, it is advisable to focus not only on pay differences between women and men, but also on differences between employees in genuinely comparable roles.

Conversely, purchasing specialised tools to calculate the gender pay gap may be premature at this stage, until the Czech methodology and the scope of the data to be monitored are known.

• Map the criteria currently used to determine pay, bonuses and benefits.

• Verify whether differences in remuneration can be objectively justified.

• Check whether the rules governing bonuses and benefits are clear and consistent.

• Review recruitment processes, job advertisements and related documentation.

• Begin preparing an internal policy governing the remuneration system and the provision of benefits.

Conclusion

The forthcoming amendment is not solely a matter of equal pay. For most employers, it will require adopting an internal policy governing the remuneration system and the rules for providing benefits. A well-designed system helps managers make consistent decisions, strengthens employee trust and makes payroll costs more predictable.

As these changes are currently expected to take effect as early as 1 January 2027, we recommend beginning preparations as soon as possible. Establishing a transparent and workable remuneration system generally requires more than merely updating documentation. The labour inspectorate is also expected to check compliance with certain new obligations, including the obligation to adopt a respective internal policy. Non-compliance may result in penalties.

Taking practical preparatory steps now lets companies respond to the new requirements in a timely, systematic manner and without unnecessary pressure.

We would be pleased to assist you with a legal audit of your existing remuneration system, the preparation of internal policies and the practical implementation of the forthcoming changes.

By Mgr. Dagmar Junková

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