Transparent remuneration

Imagine a world where the question “How much will I earn?” is no longer taboo before signing a contract. Where your employees know exactly what criteria are used to determine their salary and how they compare to colleagues in similar positions. The European Directive on Transparency of Remuneration (EU 2023/970) may sound like yet another legal burden at first glance, but the reality is quite different—and better. This legislation is not about the state dictating wage levels or colleagues looking at each other's pay slips. It is about something much more important: the ability to establish a fair, understandable, and defensible remuneration system in companies.

Author of the article: ARROWS (JUDr. Barbora Kořenářová, office@arws.cz, +420 245 007 740)

The aim of transparency is to provide equal opportunities for all, regardless of gender. And it is precisely the gender pay gap that is one of the reasons why the directive was created. Among other things, it aims to level the playing field in situations where women do not know how much to ask for a given position, how much their colleagues are earning, or what the usual remuneration is. This is not about blaming companies, but about promoting a culture that is fairer, more open, and ultimately more productive.

What can we expect and when?

The directive must be transposed into Czech law by June 7, 2026, at the latest. The fundamental changes it will bring will affect all companies, albeit with varying impacts depending on their size:

• From 2027, companies with more than 250 employees will be required to publish information on gender pay gaps annually, and companies with more than 150 employees will be required to do so every three years.
• From 2031, reporting will be extended to companies with 100 or more employees, again at three-year intervals.

These figures are not daunting if we start preparing now. And there is no doubt that it will pay off. And yes, non-compliance will be penalized. The amount of the fines has not yet been finalized, but administrative proceedings, reputational risks, and possible damages from labor disputes can be expected, in which the burden of proof will be on the employer!

What does (not) transparency mean?

Transparency in remuneration does not mean that you will publish the salaries of all employees down to the last penny. Nor does it mean that the state will set tables and wage bands as in the old days.

Transparency means that employers will have to be able to explain why a particular employee is paid what they are. Explanations such as “they asked for a raise” will no longer suffice. The reasoning must be based on objective, measurable, and gender-neutral criteria, such as the level of responsibility, length of service, or the difficulty of the job.

We already know that it will be necessary to inform applicants about the salary range in the job advertisement, provide employees with information about their own remuneration and the average salary by gender, and demonstrate that differences in remuneration are based on gender-neutral criteria.

For companies: Tips on how to prepare smartly (and calmly)

1. Start before you have to

Waiting until June 2026 is really not an ideal strategy. Companies that start implementing equal pay principles earlier will not only be better prepared for the legislative change, but will also strengthen their reputation, gain a head start on ESG requirements, and attract quality people.

2. Conduct an audit and standardize job descriptions

Focus on your internal structure. Are your job descriptions clear? Are salaries set according to consistent rules? Are some “traditionally female” positions undervalued?

Equal work means that two employees perform essentially the same tasks—for example, two accountants in the same position with the same responsibilities and job description.

On the other hand, work of equal value may not be identical in content, but it has a comparable overall level of difficulty – it involves a similar level of skill, responsibility, effort, or working conditions, i.e., the degree of responsibility, physical or mental strain, necessary skills, qualifications, complexity of decision-making, and working conditions. Two different professions can therefore be equivalent in terms of the value of work. A typical example is a production technician and a caregiver or nurse—although they work in different sectors and with different tools, both professions carry a high degree of responsibility, require professional knowledge, empathy, stress resistance, and often work in physically or emotionally demanding conditions. The value of their work is essential to the functioning of society—technicians for economic stability, care professions for social sustainability. Yet historically, “female” professions have been undervalued precisely because they are associated with stereotypes about natural caregiving rather than measurable expertise. The goal of the principle of equal pay for work of equal value is to correct these inequalities.

Conduct an audit before you have to do it under pressure.

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3. Create a system for explaining wages

A comprehensible wage system is essential today. After 2026, you will have to be able to justify every remuneration decision – and not just HR, but line managers as well. I therefore recommend starting training and creating internal manuals in good time.

For HR: Use the tools that already exist

• You can start fine-tuning your salary bands and job evaluations right away. The tools to do this exist – often for free. After 2026, consultants will be in high demand and their calendars will be full. Don't wait.
• Focus on the gender pay gap. If you have differences greater than 5% that are not justified by objective criteria, you will have to address the situation. And that can be significantly more challenging if you are not aware of these differences in time.

For managers: Be a role model

Transparency is not just an HR issue. Leaders should lead by example. If you communicate openly, clearly, and fairly within your company, you create an environment of trust—and that pays off in the form of motivation, loyalty, and lower turnover. What's more, if you are in a sector where ESG standards and equal pay are part of the selection process or partnership conditions (e.g., public procurement), transparency is no longer a “nice-to-have” but a competitive necessity.

For women: Ask questions (and practice!)

Female employees and job applicants finally have support in the new legislation to ask for what they are entitled to. But start now – ask about salary during interviews, research what is standard for the position, and keep an eye on job offers. Transparent disclosure of salary ranges in job advertisements gives women (and men) a concrete starting point from which to negotiate—they no longer have to answer the question “What salary are you looking for?” blindly. Let's stop being afraid to talk about money. The more common this becomes, the less possible it will be to unfairly undervalue women's work, which has historically been – and often still is – underappreciated. Transparency is not just a formal tool here, but a real means for women to act with greater certainty, knowledge, and confidence.

Conclusion: Transparency is not bureaucracy. It is an opportunity.

This is not about the EU deciding on yet another regulation. It is a step towards fair and predictable working conditions – not just for women, but for everyone. Transparency can be a tool for companies to grow, innovate, and professionalize their people management. And for women, it is finally a clear framework for asking for fair pay. Don't be afraid of transparency. Misinformation that everyone will be able to see each other's paychecks or that the state will determine how much people earn is completely unrealistic. The main thing that is coming is an opportunity to move your company forward, improve workplace relations, and contribute to a balance in remuneration that will benefit everyone.

Our lawyers deal with the issue of transparent remuneration systematically, in cooperation with clients in various sectors and of various sizes. We help companies set up pay systems, prepare internal guidelines and processes for providing information to employees, review job evaluations, train HR and management on new requirements for communicating about pay, and, above all, prevent disputes and fines before they become a reality.

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