Work and family in balance: how ESG principles are changing the game

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

Work-life balance is becoming one of the key issues in modern employment law and HR. This aspect not only has a significant impact on equal pay, but is also a fundamental pillar of the social dimension of ESG (Environmental, Social, and Governance). ESG principles now represent a standard for sustainable business that emphasises the impact of companies on society, the environment and their internal management.

Childcare imbalance and its impact on women's careers

One of the most fundamental problems in the area of equal pay is the imbalance in the distribution of childcare. In the Czech Republic, this responsibility is still predominantly borne by women. This has a direct impact on their career paths and earnings. Women often opt for part-time or flexible forms of work in order to be able to combine work and family care. However, this is often at the cost of lower wages and limited career progression opportunities.

According to statistics, parenthood is one of the main factors contributing to the gender pay gap (GPG). Career breaks, less demanding positions and limited access to senior roles for women are reflected not only in an immediate reduction in earnings, but also in a long-term decline in future earnings.

The Labour Code stipulates that female employees after maternity leave and male or female employees after parental leave have the right to return to their original job and workplace. If this is not possible, for example due to the closure of a workplace, the employer is obliged to reinstate them according to the employment contract. If a parent returns from parental leave before the child reaches the age of 2, he or she is entitled to return to the original job and workplace.

On the basis of the so-called flexi amendment, which is expected to come into force on 1 January 2025, a mother on parental leave will be able to take up a DPP with the same employer and perform the same type of work.

The amendment responds to the demand of practice, when mothers on parental leave in particular want to earn extra money with their employer and prefer to continue the same type of work. The amendment thus gives them the opportunity to flexibly join the workforce without having to interrupt their parental leave.

It is important to note that parental leave is regulated in the Labour Code in a flexible way, allowing it to be taken repeatedly in shorter periods of time, for example in weeks. The amendment thus only expands the options for employees who are looking for ways to balance childcare with work activities.

Entitlement to parental allowance is not excluded if you work on a DPP during parental leave, provided that the conditions set out in the Act on State Social Support are met.

Indirect discrimination and the issue of wage indexation

Indirect discrimination plays an important role in widening the pay gap. For example, the preference for full-time employees often disadvantages women, who are more likely to work part-time. The lack of wage indexation on return from parental leave is also an important issue. If employers do not compare the wages of these employees with the current earnings of their colleagues doing the same job, there is de facto discrimination.

ESG principles as a path to change

The implementation of ESG principles can be an essential tool to improve the situation. Companies that include equal opportunities measures in their strategies can not only strengthen their competitiveness but also contribute to building a fairer society. Specific steps include:

• Flexible forms of work: offer flexible working hours, the possibility of working from home and other forms of work that make it easier to combine work and family care.
• Support childcare facilities: set up company-run nurseries, childcare corners or provide financial contributions for childcare.
• Parental allowances: employers can offer parental allowances over and above their legal obligations to support employees in caring for their children.
• Transparent remuneration systems: establish clear and gender-neutral criteria for setting pay and conduct regular remuneration audits.
• Diversity and inclusion training: to raise awareness of equality and diversity issues and the importance of reconciling work and personal life.

The role of the state

The state has an indispensable role to play in supporting the reconciliation of work and personal life. Legislative measures such as improving parental leave conditions and investing in the development of childcare facilities can make a significant contribution to reducing gender inequality. But not only that. For example, the state can introduce tax breaks for parents returning to work part-time. Providing tax benefits for part-time parents could encourage more parents, especially women, to return to the labour market without losing qualifications and work experience. The state can also introduce tax advantages for companies that introduce specific measures to promote gender equality, such as flexible working conditions, strict anti-discrimination policies and active promotion of work-family balance. Such concessions could include lower tax rates for companies that achieve specific diversity and equality objectives.

Conclusion

Reconciling work and personal life is a key element on the road to equal pay and building an inclusive work environment. Companies and the state should take steps to create conditions that enable all employees, regardless of gender and family commitments, to develop their careers and achieve fair remuneration for their work. Implementing ESG principles and investing in social capital will pay off for companies in the long run. It will contribute to increasing employee satisfaction and motivation, strengthening employee loyalty and building a positive corporate image. Thus, investing in the social pillar of ESG is not only a question of morale, but also of long-term sustainability and competitiveness.