New Pay Transparency Rules in the Czech Republic: Obligations and Sanctions in 2026

The Czech Republic is facing an extensive change in employee compensation. The European Pay Transparency Directive must be implemented into Czech law by mid-2026 and will affect all companies regardless of their size. If you currently rely on wage confidentiality clauses, you will need to reconfigure your systems. What sanctions are at risk under Czech legislation, and what steps should you take to avoid fines?

Which European directive is changing remuneration rules

The European Union has adopted Directive (EU) 2023/970 of the European Parliament and of the Council, which strengthens the application of the principle of equal pay for men and women. The Czech Republic must transpose this directive into its national legislation by June 7, 2026, at the latest. The new rules will become part of the Czech legal system over the course of the next year and a half.

The key reason for this regulation is the persistent pay gap between men and women, known as the gender pay gap (GPG). The Czech Republic has long been among the countries with one of the highest gaps in Europe, reaching nearly 18 percent. As the gap is narrowing only very slowly, the new directive introduces specific and enforceable obligations.

Main obligations of the directive and changes in practice

The new regulation introduces four fundamental areas of obligations that will affect all companies. Some obligations will apply universally, while others will be tiered based on the number of employees. Below is an overview of the changes according to how they will impact your business in the Czech Republic.

Transparency in recruitment and job advertisements

The first changes concern the recruitment of new employees. From mid-2026, employers will no longer be able to keep offered salaries secret. They will be obliged to provide candidates with information regarding the starting salary or its range directly in the job advertisement or prior to the interview.

At the same time, the regulation focuses on the other side of the process. Employers will be prohibited from asking candidates about their previous earnings or salary history. Our attorneys in Prague at ARROWS warn that companies must not attempt to circumvent this rule through indirect questions.

Furthermore, our Czech legal team at ARROWS will ensure the setup of processes for fulfilling information obligations towards candidates and employees. We will also support you during negotiations with trade unions and during joint pay assessments.

Transparency within the company

The second pillar consists of new information rights for employees. Every employee will have the right to request written information about their individual salary and the average salary levels for comparable positions. Furthermore, they will have the right to know the objective criteria used to determine salaries and career progression. Employers must provide this information within a reasonable period, but no later than two months from the employee's request.

At the same time, they will no longer be able to apply contractual confidentiality clauses regarding remuneration. The directive explicitly states that employees must not be prevented from disclosing their salary. An employee will thus have the right to discuss their salary with anyone.

Companies that have previously relied on salaries remaining confidential will need to prepare objective and well-documented remuneration systems. Our attorneys at the ARROWS law firm in Prague note that this transparency will lead to a significant shift. Improvisation and a "whoever asks for more" style will not stand up to future inspections or litigation in Czech courts.

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

associate, partner

• oliva@arws.cz

JUDr. Barbora Kořenářová

associate

• korenarova@arws.cz

Reporting on gender pay gaps

The third set of obligations concerns larger employers. Companies with more than 100 employees will be required to regularly report on the pay gap between men and women. The exact schedule according to Article 9 of the Directive is as follows:

• Employers with 250 or more employees report annually, for the first time by June 7, 2027.
• Employers with 150 to 249 employees report every three years, for the first time by June 7, 2027.
• Employers with 100 to 149 employees report every three years, for the first time by June 7, 2031.

Reports will be submitted to the relevant Czech national authorities, and gender pay gap data will be publicly accessible. If a non-objective pay gap is identified in the report, further obligations follow.

If a pay gap exceeding five percent is identified without objective justification, further obligations in the form of a joint pay assessment await you.

Joint pay assessment

When a non-objective gender pay gap of more than five percent is identified and not rectified within six months, the obligation to conduct a so-called joint pay assessment arises. The employer must, in cooperation with employee representatives, perform an in-depth analysis of why the gap occurred.

You will discuss possible causes and whether the differences are truly linked to objective factors. Based on this analysis, you must then adopt measures to remedy the situation.

Our Prague-based attorneys at ARROWS point out that this "joint assessment" is not a mere formality. It is a process whose results must be made available to employees and the Czech State Labour Inspection Office.

^{microFAQ – Legal tips on the gender pay gap and joint assessment}

1. Does even a 5 percent difference meet the criteria for a joint assessment?
Yes, if the difference in the average pay level between women and men in a given category of workers exceeds five percent and the employer does not justify this difference with objective criteria, a joint assessment must take place.

2. Who must participate in the joint assessment?
The employer and employee representatives must participate. If a trade union operates within the company, negotiations are primarily held with them. If not, then with the works council or representatives for health and safety at work (OSH).

3. What happens if an employer refuses or neglects the joint assessment?
They risk sanctions from the Czech Labour Inspection Office for breaching equal treatment obligations. Fines can range from hundreds of thousands to millions of Czech koruna.

Objective and permissible remuneration criteria

The directive and related case law clearly define which criteria for salary differentiation are objective and permissible. This is where one of the most significant changes lies regarding how companies can structure their remuneration systems under Czech law.

Permissible criteria for differential pay include:

• Education and qualifications required for the performance of the work.
• Practical knowledge and skills.
• Complexity, difficulty, and responsibility of the work.
• Working conditions and performance.

Inadmissible criteria that Czech courts do not accept include gender, age, race, religion, or family care. The criterion of place of work based solely on living costs in a given region is also problematic. If you wish to maintain regional differentiation, you will need to defend it based on real and objective factors under Czech law.

Sanctions for Breach of Obligations

Sanctions for failing to implement the new system can be significant. Czech legislation already allows for high fines for unequal treatment and discrimination. It is expected that the transposing amendment will clarify these offenses in accordance with the EU directive. For an administrative offense in the area of equal treatment, a legal entity faces a fine of up to CZK 10,000,000.

Financial fines from the state are not the only risk. An employee who believes they are being discriminated against may turn to the Czech courts. The directive introduces a shift in the burden of proof, where the employer must prove that no breach of the principle of equal pay has occurred.

In practice, a company often lacks a clear system, leading to lawsuits, reputational damage, and compensation costs. Our attorneys in Prague at ARROWS law firm are insured for professional liability in the range of hundreds of millions of crowns.

How to Prepare for New Obligations

Companies now have roughly a year and a half to prepare. While this may seem like a long time, given the complexity of the changes, it is necessary to start early. Our Prague-based attorneys at ARROWS recommend the following procedure.

Audit of the Current Remuneration System

The most important step is to start with an audit and map out how your remuneration currently works. How many position categories do you have, are there criteria for classification, and how are bonuses determined? Our Czech legal team at ARROWS specializes in employment law and compliance. We understand how Czech companies operate and where the greatest risks arise. We offer a legal audit of the remuneration system, revision of wage regulations, and representation during inspections.

Revision of Employment Contracts and Internal Regulations

Prepare to remove wage confidentiality clauses. Review employment contracts, wage statements, work rules, and collective agreements. Simultaneously, prepare a clear internal regulation describing the remuneration system.

Setting up Transparent Communication

Employees will have the right to information, so you must set up a process for handling their requests. Consider proactive communication and explain to employees how their wages are determined before they start asking.

Reporting Preparation for Larger Companies

If you have more than 100 employees, start addressing data collection for future reporting. If you identify an unjustifiable gender pay gap, prepare a strategy for its gradual elimination before the law requires it.

microFAQ – Legal Tips for Preparing for New Obligations

1. How much does a remuneration system audit cost?
The price depends on the size of the company and the complexity of the data, usually starting from tens of thousands of crowns. However, it is an investment that prevents much higher fines.

2. We have a company with fewer than 50 employees. Do we have to do all these things?
Gender pay gap reporting does not apply to you. However, transparency obligations, such as stating the wage in job advertisements or the ban on confidentiality, apply to all employers in the Czech Republic.

3. We are not discriminatory; we have fair wages. Is it enough to leave it as is?
Without formal documentation and objective criteria, you will not be able to prove your fairness. The burden of proof will be on you, which is why you need a high-quality wage regulation.

Timeline of Obligations

Overview of critical deadlines to prepare for:

• By June 7, 2026: Transposition of the directive and effectiveness of the law (ban on confidentiality, wages in advertisements).
• January – June 2026: Finalization of internal processes and adjustment of documentation.
• By June 7, 2027: First reporting for companies with 150 or more employees.
• By June 7, 2031: First report for companies with 100 to 149 employees.

Our attorneys in Prague at ARROWS law firm recommend not waiting until the last minute for the Czech law to be published in the Collection of Laws.

Executive Summary for Management

• Transparent remuneration is a future legal obligation in the Czech Republic.
• Risks are both financial and reputational (fines up to CZK 10 million).
• Preparation takes time (revision of contracts and setting up grading).
• Reporting applies to companies with over 100 employees.
• Transparency is an opportunity for recruitment and retention.

Conclusion

The year 2026 will bring fundamental changes to Czech HR. Transparent remuneration will cease to be a choice and will become a strict legislative obligation. If you want to avoid sanctions and litigation in Czech courts, it is necessary to start preparing in time.

Our Prague-based attorneys at ARROWS are ready to guide you through this process. We handle employment law agendas daily and help companies set up a fair and legally secure environment.

FAQ – Most Frequent Legal Questions on Transparent Remuneration

1. Do all companies have to publish the wage amount in job advertisements?
Yes, this obligation will apply to all employers. From the date the law takes effect (no later than June 2026), it will be mandatory to inform candidates about the starting wage or its range.

2. What is the deadline for providing wage information to an employee?
The employer must provide the information within a reasonable period, no later than two months from the date of the employee's request.

3. What happens if we identify a gender pay gap exceeding 5%?
If the difference cannot be objectively justified and rectified within 6 months under Czech law, you must conduct a joint pay assessment in cooperation with employee representatives.

4. Do these new obligations apply to small businesses?
Yes, even small companies in the Czech Republic must maintain transparency during recruitment and adhere to the ban on pay secrecy. Only the regular reporting obligation does not apply to firms with fewer than 100 employees.

5. Do we need to update our employment contracts?
Yes, it is necessary to remove or invalidate pay secrecy clauses to comply with the new regulations. Our Czech legal team at ARROWS law firm can assist you with this revision – office@arws.cz.

Disclaimer: The information contained in this article is for general informational purposes only and serves as a basic guide to the issue. While we strive for maximum accuracy, Czech legislation and its interpretation evolve over time. To verify the current status of regulations and their application to your specific situation, it is essential to contact our Prague-based law firm, ARROWS (office@arws.cz). We bear no responsibility for any damages or complications arising from the independent use of information from this article without our prior individual legal consultation and professional assessment. Every case requires a tailor-made solution under the Czech legal system; therefore, do not hesitate to contact us.

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