Transparent Pay: Navigating the 2026 Regulatory Landscape

An overview of changes in labor law can be found in the article Labor Law 2026.

What applies today – and where employers are losing disputes

The most widespread misconception of 2026 is: “As long as the directive is not in force, we are not at risk.” The opposite is true. The fundamental pillars of pay transparency have been anchored in Czech law long before the directive, and courts actively enforce them.

• Equal pay for equal work or work of equal value. According to Section 110 of Act No. 262/2006 Coll., the Labor Code, all employees of the same employer are entitled to equal wage, salary, or remuneration under an agreement for equal work. The comparative criteria are the complexity, responsibility, and strenuousness of the work, working conditions, performance, and results – nothing else. The obligation of equal treatment in remuneration is also imposed on employers by Section 16 of the Labor Code.

• Regional wage differences will not stand up in court. In its judgment of July 20, 2020, file no. 21 Cdo 3955/2018, in a dispute involving a driver of Česká pošta, the Supreme Court concluded that socio-economic conditions and the cost of living at the place of work performance are not comparative criteria under Section 110 of the Labor Code. Therefore, a Prague employee cannot receive a higher wage for equal work simply because Prague is more expensive. This conclusion is followed by a number of other decisions (e.g., file no. 21 Cdo 2000/2024 or 21 Cdo 1702/2024), and related lawsuits are still being heard by courts in 2026.

• The ban on wage confidentiality already applies. Since June 1, 2025 (the "flexi-amendment" to the Labor Code), Section 346a applies: an employer must not restrict employees from handling information about the amount and structure of their wage, salary, or remuneration under an agreement. Therefore, wage confidentiality clauses in employment contracts are already contrary to the law today, and restricting an employee with such a clause is an offense under Section 24(1)(e) of Act No. 251/2005 Coll., on Labor Inspection, with a fine of up to CZK 400,000. Failure to ensure equal treatment or discrimination in remuneration carries a fine of up to CZK 1,000,000.

• The burden of proof lies with the employer. If an employee presents facts before a court suggesting gender-based discrimination in remuneration, under Section 133a of the Civil Procedure Code, it is up to the employer to prove that they did not violate the principle of equal treatment. Under Section 10 of the Anti-Discrimination Act, a discriminated employee may seek the cessation of discrimination, removal of its consequences, reasonable satisfaction, and, in serious cases, monetary compensation for non-pecuniary damage – in addition to back pay with late payment interest.

In practice, this means only one thing: an employer who cannot prove today why two people in comparable positions earn different amounts of money loses the dispute under current law. The directive does not establish this state of affairs; it only makes it visible.

How to justify different pay. Case law does not state that all employees in a position with the same title must receive the same pay. The employer will justify the difference if they prove that the work is not the same – for example, by a different and in writing described job description, a more demanding working hours schedule (shifts, night work, overtime), or a riskier working environment. Under Section 110(4) of the Czech Labour Code, these are also working conditions criteria. However, everything must be documented in advance, not retroactively before a court. At the same time, the equal pay rule always applies within a single employer and to employees – the remuneration of a managing director (jednatel) for the performance of their office is not a wage under the Czech Labour Code. We explain the difference between managing director remuneration and employee wage in a separate article.

Directive (EU) 2023/970: What Exactly It Requires

Directive (EU) 2023/970 of the European Parliament and of the Council strengthens the application of the principle of equal pay for men and women for equal work or work of equal value through pay transparency. It is based on the premise that the main obstacle to enforcing equal pay is non-transparent pay systems – while the Czech Republic has long been among the countries with the highest gender pay gap in the EU (around 15–18%).

Key obligations under the directive:

• Recruitment: information on the starting wage or its range before the interview (in the job advertisement or otherwise in advance) and a ban on asking about the applicant's wage history. Applies to all employers regardless of size.

• Internal transparency: gender-neutral criteria for remuneration and career progression made accessible to employees; the employee's right to information on their own pay level and the average pay levels, broken down by sex, for categories of workers performing the same work or work of equal value, with a response within two months.

• Reporting pay gaps: employers with 250+ employees annually, with 150–249 employees every three years (for the first time by June 2027 under the directive), with 100–149 employees every three years from 2031.

• Joint pay assessment: if reporting shows an unjustified difference in average pay between women and men of more than 5% and the employer does not remedy it within six months, they must conduct a thorough analysis of the causes in cooperation with employee representatives and take corrective measures.

• Enforcement: strengthened reversed burden of proof, right to full compensation (back pay including bonuses and non-monetary benefits, interest, compensation for damage), and effective sanctions.

The term remuneration is broad – in addition to basic wage, it includes bonuses, premiums, allowances, benefits, and other work-related performance. The headcount also includes "agreement workers" (DPP/DPČ) if their relationship meets the characteristics of dependent work.

Equal work or work of equal value? Equal work basically means identical tasks – for example, two payroll accountants with the same job description and responsibility. Work of equal value does not have to be identical in content: complexity, responsibility, and strenuousness of work, working conditions, and work performance and results are compared (Section 110(2) of the Czech Labour Code). Thus, different professions, such as a production technician and a nurse, can be equivalent. It is precisely in typically "female" positions that the demands on responsibility, communication, or psychological stress are often underestimated – and that is where hidden pay gaps arise.

Czech Transposition: Minimalist Amendment and Realistic Deadlines

The Czech Republic did not meet the transposition deadline of June 7, 2026. The Ministry of Labor and Social Affairs presented a draft transposition amendment to the Labor Code on March 16, 2026, opting for a so-called minimalist transposition – meeting European requirements without obligations beyond their scope.

The amendment builds on and elaborates the existing provisions of Sections 16 and 110 of the Labor Code; it is newly intended to impose an obligation on employers to establish and maintain a transparent remuneration system based on objective, gender-neutral criteria. The government submitted the proposal to the Chamber of Deputies on September 8, 2026, as parliamentary document 300; it envisages split effectiveness.

Two notes on the timeline: First, the deadlines may still shift during the legislative process – the basic framework of obligations stems directly from the directive, but specific Czech parameters may still change during the legislative process. Second, after the transposition deadline expires in vain, sufficiently precise provisions of the directive may apply directly against the state and public employers (so-called vertical direct effect); the public sector should therefore not wait for the amendment to take effect at all to start preparing.

Transparency in Recruitment: The End of "Wage by Agreement"

According to the government proposal, the employer will have to verifiably inform the applicant of the minimum wage and other benefits they would be entitled to as an employee, no later than before concluding the employment contract. The directive envisages providing information before the interview or otherwise in a way that allows the applicant to negotiate the wage in an informed manner; stating the range directly in the job advertisement is therefore the safest practice. The range must be realistic; an extremely wide range will be assessed as circumvention of the law.

At the same time, there is a ban on inquiring about the applicant's wage history. If the applicant discloses it themselves, the employer must not use it as a basis for determining the wage if it would lead to inequality – objective criteria of the position must decide. Beware also of AI-driven recruitment tools: the employer bears responsibility for any discriminatory output of the algorithm, as we discuss in the article Artificial Intelligence in HR.

For companies that have so far kept wages secret as a competitive advantage, this represents a strategic change in recruitment communication – and at the same time an opportunity: transparent job advertisements demonstrably increase the conversion of high-quality candidates.

Employees' Right to Information on Remuneration

From 2028 (as proposed in the amendment), every employee will be able to request in writing information on their pay level and the average pay levels, broken down by sex, for the group of work of equal value in which they work. The employer must respond in writing or electronically within two months at the latest.

Important: this is not about publishing specific wages by name. A colleague's individual wage remains protected personal data – averages for categories are communicated. However, companies without a formalized classification of positions into job categories will not be able to respond to the request at all, which is a violation in itself. Therefore, the basis of preparation is a wage audit. You can find the procedure in the article on how to conduct a wage audit step by step.

Reporting Pay Gaps and Joint Assessment

The reporting obligation will gradually apply to employers with 100 or more employees (see timeline). According to the government proposal (parliamentary document 300), reporting has two parts. A summary report on the gender pay gap for the employer will be prepared by March 31 by the Ministry of Labor and Social Affairs based on data from the unified monthly employer report (JMHZ). The employer themselves will then prepare a report on pay gaps in groups of work by April 30, deliver it to the ministry via data box, and make it accessible to employees, trade unions, and the works council – without data from which the remuneration of a specific employee could be identified. Since the state will have wage data from the JMHZ available, any discrepancy between the employer's report and reality will be easily detectable.

If the report shows an unjustified gap in the average hourly remuneration of female and male employees of at least 5% in any category of workers, which the employer does not remedy within six months of making the report available, they must conduct a pay assessment within two months: analysis of causes, corrective measures, and making the results available to employees and supervisory authorities. This is not a formality, but a negotiation with sensitive data on the table – legal guidance of this process is key. If a trade union operates in the company, it is the main partner in this negotiation; we describe the role of trade unions in wage negotiations separately.

How to Prepare: Plan Until the End of 2026

1. Pay audit (Q3 2026). Categorization of positions according to the value of work (criteria of Section 110(3)-(5) of the Labor Code: qualifications, complexity, responsibility, workload, conditions, performance) and comparison of actually paid remuneration, including bonuses and benefits. Goal: to find out where differences exist in comparable positions and whether you can explain them objectively.

During the audit, four sources of differences are most often overlooked: benefits (a higher-class company car in positions occupied predominantly by men is also remuneration), cumulative effect (a 2% lower annual increase makes a big difference after ten years), return from parental leave without reflecting the increases that colleagues in comparable positions received in the meantime, and algorithms that propose wages from historical data. Beware of the remedy itself: a one-off wage increase for only one group without objective criteria can establish new claims for other employees.

2. Remuneration system and wage regulation (Q4 2026). Definition of categories of work of equal value, wage ranges for positions, and gender-neutral criteria for movement within the range. A manager's subjective impression will not stand up in court; documented evaluation will. But beware of employees whose wage is above the newly set band – we discuss when and how an employee's wage can be reduced in a separate article. This includes a review of employment contracts and wage statements – including the removal of confidentiality clauses in conflict with Section 346a of the Labour Code and the correct (non-entitlement) setting of bonuses. If an employee rejects a new statement, you can handle it according to the guide on what to do when an employee refuses a wage statement.

3. Recruitment processes (Q4 2026 – Q1 2027). Job advertisement templates with wage ranges, adjustment of interview scripts (no questions about wage history), ATS setup, and auditing of AI tools.

4. Manager training and communication (ongoing). Managers must be able to explain why someone has a certain wage and what they must achieve to grow. Transparency without prepared managers will cause more conflicts than it resolves.

Audit data is subject to personal data protection, and the outputs can be used against you – conduct the audit under the guidance of a law firm so that working drafts are covered by attorney-client privilege.

Small and Medium-Sized Enterprises: This Applies to You Too

Reporting does not apply to companies with fewer than 100 employees, but everything else does: wage ranges in recruitment, prohibition of history questions, transparent criteria, prohibition of wage confidentiality, and the risk of lawsuits under Section 110 of the Labour Code. Paradoxically, smaller companies without an HR department and with "intuitive" remuneration are the most vulnerable – they lack the documentation to defend themselves in court. The solution does not have to be bureaucratic: a simple wage regulation with bands and criteria on a few pages will cover most risks. You can find inspiration in the article on how to approach setting fair remuneration and internal wage rules in a company.

Conclusion

Pay transparency is not a future that can be waited out. The toughest tools – equal pay for equal work, reversed burden of proof, the ban on confidentiality, and million-crown fines – already apply today, and the amendment from 2027 will only attach procedural obligations to them. A company that undergoes an audit and sets up the system in 2026 will gain a head start in recruitment and peace of mind during the first inspection as well as the first employee request for data.

ARROWS, a Prague-based law firm, has a team of employment law specialists who will guide you through the entire process – from the audit and pay regulation to representation in disputes. With professional liability insurance of up to CZK 350 million, we provide our clients with maximum security.