New EU Pay Transparency Directive: Key Obligations for Czech Employers by 2026

The year 2026 brings a fundamental paradigm shift for the Czech economy in the areas of human resources and employee compensation. The European Union Pay Transparency Directive, which the Czech Republic must implement by June 7, 2026, introduces rules that will affect virtually all employers. This new legal framework significantly strengthens the enforceability of the right to equal pay and shifts the burden of proof onto the employer under Czech law.

Quick Summary

• Implementation Deadline: The new European Pay Transparency Directive must be implemented into Czech law via transposition by June 7, 2026, at the latest.
• Reporting: The first mandatory reporting for large companies (with 250 or more employees) will take place in June 2027 for the 2026 calendar year.
• Key Obligations: Disclosure of salary ranges in job advertisements, a ban on asking candidates about their salary history, and an obligation to explain pay differences exceeding 5%.
• Burden of Proof: The burden of proof is shifted to the employer, who must prove in the event of a dispute that no discrimination occurred under Czech legislation.
• Sanctions: Violation of obligations can lead to fines from the Labor Inspection, civil lawsuits by employees for back pay, and significant reputational damage.

European Directive 2023/970: Origin, Purpose, and Legislative Context

The adoption of Directive (EU) 2023/970 of the European Parliament and of the Council represents a milestone in the long-standing efforts of the European Union to reduce the persistent gender pay gap. The purpose of the directive is not to introduce entirely new substantive legal principles, but to fundamentally strengthen their enforceability in practice.

The Czech Republic has long been in an unfavorable position, as it ranks among the countries with one of the highest gender pay gaps in the European Union.

The directive is based on the premise that the main obstacles to applying the principle of equal pay are non-transparent pay systems and a lack of legal certainty. Increased transparency will allow for better detection of gender bias and discrimination.

The Czech Ministry of Labour and Social Affairs is preparing an amendment to the Labor Code and related regulations, with an explicit ban on pay secrecy clauses also expected.

Transparency in the Recruitment Process

A fundamental change in the recruitment process is the employer's obligation to inform candidates about the starting salary or salary range. This information must be provided either directly in the job advertisement or in another manner before the first job interview.

This rule applies to all employers regardless of size and aims to reduce information asymmetry. In practice, this means the end of advertisements using the phrase "salary by agreement" without specifying a concrete framework.

Employers are also prohibited from asking candidates about their salary history in previous jobs. Salary decisions must be based exclusively on objective criteria related to the specific position.

Internal Transparency and Employees' Right to Information

During the term of employment, employees have the right to request information from the employer regarding their individual pay level. They may also request data on the average pay levels of employees performing the same work, broken down by gender.

The employer must provide this information within a reasonable period, but no later than two months from the date of the request, in written or electronic form.

Employers also may not prevent employees from disclosing information about their salary to others. Confidentiality clauses in employment contracts regarding salary will be declared invalid under the Czech legal system.

Objective Job Evaluation and Defining Pay Grades

Employers must have pay systems set up to ensure equal pay for work of equal value. This requires the implementation of gender-neutral job evaluation and classification systems.

Criteria must be objective, measurable, and must not directly or indirectly discriminate based on gender. Typical criteria include qualifications, skills, responsibility, effort, and working conditions.

Many companies in the Czech Republic still lack formalized pay regulations, and decisions are often made intuitively. It is precisely the absence of clear rules and documentation that represents the greatest legal risk in the context of the directive.

Gender Pay Gap Reporting

The obligation to regularly report on gender pay gaps will be introduced gradually based on the size of the employer. Employers with 250 or more employees report annually, for the first time in June 2027. Companies with 150 to 249 employees report every three years.

Reports must include data on pay differences and differences in variable components. They must also map the representation of men and women in individual pay quartiles.

Related Remuneration Questions

1. What counts as "remuneration"?
The concept of remuneration includes not only the basic wage or salary but also all other components such as bonuses, premiums, allowances, benefits, compensation, and contributions related to the performance of work.

2. Are "contractors" (DPP/DPČ) included?
Yes, the directive has a broad definition of a worker, and the number of employees also includes persons working on the basis of agreements (DPP/DPČ) if their relationship meets the characteristics of dependent work under Czech law.

3. What does the 5% threshold mean?
If reporting reveals a difference in average pay between women and men higher than 5% that is not objectively justified, an obligation arises to conduct a joint pay assessment.

Joint Pay Assessment

If an unjustifiable pay gap exceeding 5% is proven and the employer does not remedy it within six months, they must conduct a joint pay assessment. This is an in-depth analysis of the causes of the differences in cooperation with employee representatives.

This process is not mere formal administration but a negotiation, the results of which must be made available to employees and supervisory authorities. The legal team at ARROWS law firm in Prague frequently assists clients in formulating these measures.

Shift in the Burden of Proof

One of the most significant changes is the shift in the burden of proof in litigation regarding equal pay in Czech courts. If an employee presents facts suggesting discrimination, it will be up to the employer to prove otherwise.

The employer must be able to demonstrate in court that the difference in pay is based on objective, non-discriminatory criteria, such as higher performance or qualifications.

Case law in the Czech Republic already confirms that arguments regarding regional differences in living costs do not stand as a reason for different pay for the same work at the same employer. The directive legislatively anchors and generalizes this trend.

Who can advise you on this issue?

Mgr. Jakub Oliva, LL.M., MSc.

associate, partner

• oliva@arws.cz

JUDr. Barbora Kořenářová

associate

• korenarova@arws.cz

Preparation of the Czech Legal Framework

The Czech Republic is in the process of preparing transposition legislation, and the deadline of June 7, 2026, is binding for member states. The Ministry of Labour and Social Affairs is working on an amendment to the Labor Code to incorporate the requirements of the directive.

Part of the broader context is the Action Plan for Equal Pay for Women and Men 2023–2026, which contains measures to support transparency. Companies should not wait for the final wording of the law, as the directive provides a clear framework of requirements.

Current State Analysis and Wage Audit

The first step is to conduct an internal wage audit to determine whether pay gaps exist for comparable positions within the company. The analysis should include the categorization of job positions based on their value and a comparison of actual wages paid.

Audits often reveal that the remuneration system is not formalized, which represents a significant risk. ARROWS law firm in Prague handles the legal aspects of these audits, identifies risk areas, and proposes adjustments to contractual documentation.

Defining the Remuneration System and Criteria

Based on the audit, it is necessary to create or update wage regulations, which must contain clear rules for determining pay. Remuneration criteria must be gender-neutral, based for example on skills, effort, and responsibility.

The system should define wage ranges for individual positions, while differences within a range must be justifiable. Subjective feelings of managers will no longer suffice as justification before a Czech court.

Communication Preparation and Manager Training

Implementing transparency requires a change in corporate culture; therefore, managers must be trained in applying the new rules. They must be able to explain to subordinates the level of their wage and the conditions for increases based on objective data.

Specific Challenges for Small and Medium-Sized Enterprises (SMEs)

Although reporting obligations primarily affect large companies, basic transparency obligations apply to all employers in the Czech Republic. Small firms often lack HR departments and rely on informal agreements, making them vulnerable.

Our Czech legal team at ARROWS can prepare tailor-made solutions even for smaller clients, ensuring legal compliance without unnecessary bureaucracy.

Recruitment Practices and Changes in Candidate Communication

From mid-2026, job advertisements must include the wage range, forcing companies to rethink their strategies. If they previously kept wages secret as a competitive advantage, they will now have to act openly.

Related Recruitment Questions

1. How wide can the range be?
The range should be realistic, as stating extreme ranges will be considered an evasion of the law and non-transparent conduct.

2. What if the candidate "boasts" about their previous salary voluntarily?
If the information is shared voluntarily, the employer may listen, but must not use it as a basis for determining the wage if it would lead to inequality.

Conclusion

The year 2026 and the implementation of the directive represent one of the biggest changes in HR and law for Czech companies. Firms that prepare in time will gain a competitive advantage in the labor market and minimize legal risks associated with sanctions.

ARROWS law firm in Prague has a team of employment law specialists ready to guide you through the entire process. With professional liability insurance of up to CZK 400 million, we provide our clients with maximum security.

FAQ on Transparent Remuneration

1. When exactly will the new rules apply in the Czech Republic?
The Czech Republic must transpose the directive by June 7, 2026, and the amendment to the Czech Labor Code is expected to take effect on that date. To consult the current status of legislation, contact us at office@arws.cz.

2. What sanctions does a company face for non-compliance?
In addition to fines from the Labor Inspectorate, the greatest risk is the obligation to pay back wages to discriminated employees, plus interest and compensation for non-material damage.

3. I have a wage confidentiality clause in my contracts. Is it valid?
According to the directive and future Czech legislation, such clauses will be absolutely null and void. We recommend a review of employment contracts and the removal of these provisions; our Prague-based attorneys at office@arws.cz can assist you with this.

4. Do I have to publish the specific wage of every employee by name?
No, the obligation concerns providing information on average wages in categories of workers performing the same work. The individual wage of a specific colleague remains protected personal data.

5. How should I prepare if I don't have any wage scales?
It is necessary to start with job descriptions and evaluations, and subsequently create a structure of wage bands. The experts from ARROWS can help you set up the legal framework for this system.

Disclaimer: The information contained in this article is for general informational purposes only and serves as a basic guide to the issue. Although we strive for maximum accuracy, legislation and its interpretation evolve over time. To verify the current wording of regulations and their application to your specific situation, it is essential to contact ARROWS law firm in Prague directly (office@arws.cz). We bear no responsibility for damages resulting from the independent use of this information without individual legal consultation.

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