The Transparent Remuneration Directive will be a real revolution – employers will have to fundamentally change their entire approach to employee remuneration. The scope for negotiating starting salaries will essentially be eliminated – the employer will have to publish a minimum starting salary range at the time of recruitment. This will put an end to the employer’s questions such as: And how do you envision your remuneration?

All confidentiality clauses in relation to remuneration, which are now a standard part of employment contracts, will also have to disappear. Employees will therefore be able to freely share all remuneration information and compare their remuneration with other colleagues. It will depend on how the Czech legislator will handle the implementation, but it is already obvious that this will be big.

Timeline

• The Transparent Remuneration Directive (Directive (EU) 2023/970, available e.g. here) was adopted on 10 May 2023 and is now effective. The legislative process is therefore already complete.
• The Czech Republic is obliged to transpose the Directive (adopt the rights and obligations arising from it into the relevant legislation) by June 2026.

The most significant changes include:

• Obligation to inform about the starting wage or the range for the starting wage before the employment interview at the latest (whether in an advertisement or otherwise) and about the relevant provisions of the collective agreement;
• The rules should also apply to workers with agreements to perform work or to complete a job;
• The Directive confirms that advertisements will need to be gender neutral, as will the job titles;
• The employer will not be allowed to ask about the employee’s remuneration history;
• Permanent and new employees will have the right to information on:
• The average level of remuneration for employees (male and female) doing work of equal value, i.e. not the level of pay for all employees;
• Criteria set for career progression – these will need to be “objective and gender neutral”;

no later than two months from the date of application.

• Employees may subsequently submit a request for additional clarification and have the right to receive a reasoned reply.
• Employers will be obliged to inform their employees annually about their right to information and the steps necessary to exercise it.
• There will be a complete ban on confidentiality clauses regarding the amount of an employee’s remuneration.
• There will be an obligation to submit to the competent authority (presumably the Labour Inspectorate?) a report on remuneration (pay differences between men and women, including bonuses – supplementary and variable components), and this will be in the case of:
• Employers with 100-149 employees every 3 years, starting 7 June 2031;
• Employers with 150-249 employees every 3 years, starting 7 June 2027;
• Employers with 250 or more employees every year, starting 7 June 2027;
• In the event that the pay gap between women and men is at least 5% and this gap is not justified by “objective and gender-balanced criteria”, the employer will be required to justify the gap within 6 months from the date of submission of the remuneration report. Otherwise, it will be obliged to discuss, among other things, differences in remuneration, remedial measures, and an assessment of the situation with employee representatives – trade unions (the so-called joint remuneration assessment).
• Every employee will have the right to compensation for damage suffered as a result of discrimination or breach of equal pay obligations – in particular full compensation for unpaid remuneration (wages, bonuses and other lost opportunities, damage caused by other relevant factors), including interest on late payment.
• Employers must not treat employees, who exercise their rights under this Directive, less favourably.
• If the principle of equal pay is not complied with and the employee presents facts to the court indicating that discrimination has occurred, the burden of proving the absence of discrimination will shift to the employer.
• In the event of a dispute, the employer may be ordered by a court to disclose all relevant evidence in its possession (including confidential information).  
• Effective and dissuasive penalties are to be provided for breaches of obligations under the Directive.
• The Directive gives Member States discretion as to whether: failure to comply with the principle of equal pay should not be one of the grounds, on which public contracting authorities could decide about awarding a contract.
• The Czech Republic should provide training and technical assistance to employers with fewer than 250 employees regarding the obligations under this Directive.