Equal Pay! Employers Should Prepare for the New Era of Pay Transparency

The EU Pay Transparency Directive will introduce significant changes to the area of employment law. Although the Czech Republic is required to transpose the Directive by June 2026, the wording of the Czech implementing legislation is not yet available. Employers can therefore use the current period to prepare and reduce future compliance risks.

Pay transparency as a new risk management topic

Under the current Czech legal framework, equal pay is largely based on a reactive approach, with issues typically addressed only following an inspection or litigation. The Directive fundamentally changes this model.

Employers will be expected to review their pay structures, identify potential pay gaps and be able to explain them using objective criteria.

Reporting on pay gaps

Certain employers will be required to prepare regular reports on pay gaps, and it is expected that this obligation will primarily apply to employers with more than 100 employees.

From a practical perspective, it is important to note that:

• six out of seven reported indicators relate solely to the overall pay gap between women and men, regardless of specific job roles, and

• only one indicator concerns pay differences between employees performing the same work or work of equal value.

A pay gap does not automatically indicate a breach of the law. However, where significant disparities arise, employers will be expected to assess whether these differences can be objectively justified. If not, further steps and corrective measures may be required. For this reason, it is advisable to calculate these figures on a trial basis using existing payroll data to understand how current pay structures would perform under the new reporting framework.

Assessing equal pay and the group perspective

What employers should start reviewing now

Even in the absence of Czech implementing legislation, employers can already focus on several key questions:

• Pay structure

  What elements make up remuneration and which of these may generate disparities (fixed salary, bonuses, variable pay components, benefits)?

• Pay-setting mechanisms

  How are individual pay components determined and can the criteria used be objectively justified when applied consistently across the organisation?

• Internal consistency

  Would pay differences withstand comparison between employees performing the same work or work of equal value?

• Communication with employees

  At what stage is remuneration communicated to employees and is this practice consistent and adhered to in practice?

• Group arrangements

  If an employer forms part of a corporate group, is there genuine autonomy in pay-setting or is remuneration centrally determined, and can equal pay for comparable roles across the group be objectively justified?

Conclusion

The Pay Transparency Directive does not require employers to equalise all salaries. It does, however, mean that pay differences will become more visible, measurable and subject to scrutiny, and will need to be justified on the basis of clear and objective criteria.

Employers who start reviewing their pay structures and processes now will be better prepared for future reporting obligations and potential scrutiny.

We continue to monitor legislative developments and will keep you informed of any developments.

By Mgr. Dagmar Junková

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