Transparent Pay: Pay Gaps Will No Longer Be Just Inside Information
Transparent Pay: Pay Gaps Will No Longer Be Just Inside Information
What new obligations will the upcoming Czech regulation of transparent remuneration bring and why the correct division of work into groups will be important
What information on the gender pay gap will be available to employees and what the employer will need to explain
When the first reporting will start and under what conditions it will be necessary to justify or correct the pay gap of at least 5%
The upcoming rules will not only bring new calculations and reporting obligations. Their most significant impact may be the fact that information about the pay gap will reach employees directly. Therefore, employers will not only have to correctly calculate the gender pay gap, but also explain why the differences arise and whether they are justified.
The principle of equal pay for equal work or work of equal value is already in force today. However, Directive (EU) 2023/970 of the European Parliament and of the Council strengthens the possibilities for verifying its compliance. It does not prohibit the pay gap or require all employees to receive the same pay. However, the differences must be based on objective and gender-neutral reasons and the employer must be able to substantiate them.
Reward system and group settings
The Czech proposal translates this principle into specific obligations. The employer is to create a remuneration system and regulate it in a collective agreement or in an internal regulation. The proposal envisages that this obligation will come into effect as early as 1 January 2027. The system should include the division of work into groups according to their value. This does not only apply to employees with the same job title. Work with different content may also belong to one group if it has the same or comparable value.The creation of these groups is time-consuming and it is not advisable to take them only as a formal exercise. The employer must verify the actual content of the work, update job descriptions and correctly capture differences in responsibilities and demands of roles. The resulting division must be understandable to employees and at the same time sufficiently substantiated for the employer to be able to defend them in a possible inspection. Incorrectly set up groups can distort subsequent calculations and call into question the entire system.
All employees will see the results of the reporting
It is these groups that will be followed by the reporting of the pay gap. The Czech proposal works with two levels of reports. Most of the indicators for employers are to be calculated from the data of the single monthly report by the Ministry of Labour and Social Affairs. In addition, however, the employer will prepare a more detailed report on the differences in pay between women and men in groups of work.It is essential that this more detailed report should not remain just a document intended for the company's management, HR department or state authorities. The employer should make it available in a way that is customary and accessible to all employees. They will thus be able to familiarize themselves with the results without having to apply for them individually.
This does not mean that the wages of specific persons will be published. The report should contain aggregated data on the pay gap between men and women for groups of work. If any data would make it possible to reveal the remuneration of a certain employee, the employer will not make it available and justify its action. However, employees will get a better overview of whether the remuneration of women and men in their group differs.
It is not enough to calculate the differences, they will also have to be explained
If positions are classified into inappropriate groups, the data is incomplete or the differences are not supported by clear rules, the problem will no longer remain only within HR or management. It can raise questions from employees, their representatives and supervisory bodies and affect trust in the entire remuneration system.Nor does the often mentioned difference of more than 5% between men and women automatically mean discrimination. The decisive factor will be whether the employer can explain it with objective and gender-neutral reasons. However, if the difference of at least 5% in a certain group of work is not justified and corrected within six months, a more detailed assessment of remuneration should follow.
Therefore, preparation cannot be limited to a simple calculation of the pay gap. It is necessary to check the quality of the data, group settings, and the rules for wages, bonuses, and other benefits. It will be equally important to prepare the way in which the results will be explained to employees. Even an objectively justifiable difference can cause distrust if the employer is unable to communicate it clearly.
According to the government's proposal, the first reporting for 2027 is to take place in 2028 for employers with 150 or more employees. The basic direction is obvious: remuneration can no longer be perceived as a closed internal area. The employer must be prepared for state control and questions from its own employees. Therefore, it is necessary to have the system set up correctly before its results are made available.