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The Czech labor market is about to undergo significant changes with two major reforms focused on ending wage secrecy, promoting transparency, and addressing pay (in)equality. Experts say that this will help workers fight wage discrimination.
Starting June 1, a change to Czechia’s Labor Code will ban employers from including confidentiality clauses in employment contracts that prevent workers from discussing their wages. Simultaneously, preparations are underway to implement a sweeping EU directive on pay transparency, with the aim of reducing gender pay disparities and promoting wage equality.
No more restrictions on employees
Historically, many Czech employers have included confidentiality clauses in their contracts, which prohibited employees from sharing information about their pay with colleagues. Employers have traditionally argued that such clauses protect company strategies, prevent internal conflict, and ensure flexibility in salary negotiations.
However, many experts, including those at the Ministry of Labor, argue that these clauses have only served to hide pay inequalities and allow unfair wage gaps to persist.
Lawyer at Grant Thornton Veronika Odrobinová tells Czech finance site Peníze.cz that from next month “employers will no longer be able to restrict employees from sharing information about their wages, salary, or benefits with others.”
Employers who continue to enforce them could face fines of up to CZK 400,000. The law is designed to allow workers to compare wages and reveal any unjustified differences between employees performing the same work.
This reform also follows advice from the national ombudsman, who previously argued that these secrecy clauses violate workers' rights under the Labor Code. Some cases of pay inequality have already been settled in court, highlighting the need for greater transparency.
Fighting the gender pay gap
The second major change comes from an EU directive aimed at reducing the gender wage inequality. The new law includes several important requirements: job advertisements must include salary information, employers cannot ask applicants about their previous pay, and workers will have the right to request information about average pay by gender for similar jobs.
Companies with over 100 employees must report wage data to a central system, and the pay gap between men and women should not exceed 5 percent. However, the gender pay gap in the Czech Republic is around 17 percent.
While the EU directive aims to improve pay equality, most Czech companies are unprepared for these changes. A recent survey by recruitment firm Hays and consulting company EY found that two-thirds of companies do not track pay disparities, and over 80 percent of employers are not ready for the new requirements.
However, many business organizations in the Czech Republic, including the Czech Chamber of Commerce and the Confederation of Industry, have called for a delay in the directive’s implementation. They warn that the new rules could increase costs, create legal issues, and put pressure on small businesses. In a joint letter to the labor minister, they asked for a two-year delay to allow companies more time to prepare.
Despite these concerns, the Czech government is committed to making these changes, aiming to bring the country in line with EU standards and ensure fair pay for all workers.
