Directive (EU) 2023/970 of the European Parliament and of the Council of 10 May 2023 on promoting the enforcement of the principle of equal pay for men and women for equal or equivalent work through pay transparency and effective enforcement mechanisms.
I. Implications of the Directive for Companies
The Directive introduces obligations aimed at strengthening equal treatment in remuneration through increased transparency and more effective enforcement mechanisms of the right to equal pay for equal or equivalent work.
- Objective: to identify and eliminate hidden pay disparities, enhance the enforceability of the right to equal pay, and reduce the gender pay gap.
- Implications for Human Resources and Compensation: the need to review remuneration systems, implement gender-neutral evaluation criteria, adjust restructuring processes, and revise internal policies on pay confidentiality.
- Reputation and Risks: a more advantageous position for companies that act transparently; at the same time, a risk of sanctions, litigation, and reputational damage in case of non-compliance.
Scope
The provisions introduced by the Directive should also apply in national law to all employees, including part-time and fixed-term workers, as well as individuals under an employment contract or in an employment relationship through an employment agency. In certain areas, the Directive also applies to job applicants.
Deadline for Transposition of the Directive
The transposition deadline is set for 7 June 2026. By this date, the provisions introduced by the Directive should also be incorporated into national law. To date, no draft legislation has been published, making compliance with the transposition deadline uncertain. A delayed implementation would, moreover, effectively reduce the time available for putting the established rules and obligations into practice.
Some progress in this area is evident, for example, in the Action Plan on Equal Pay for Women and Men 2023–2026.
II. Main Duties of the Employer
As previously noted, the Directive addresses both the regulation of the employer’s relationships with current employees and the employer’s relationships with job applicants. The following outlines the key obligations for employers arising from the Directive.
With Respect to Job Applicants:
- Transparency in Job Advertisements – every public job posting, including internal vacancies, must indicate the starting salary or salary range for the advertised position, as well as the applicable collective agreement provisions relevant to that position
- Prohibition of Inquiries About Previous Salary – the employer must neither request nor actively seek information regarding the applicant’s prior earnings; salary history must not be used to justify pay disparities.
- Gender-Neutral Recruitment – job advertisements, job titles, and the entire recruitment process must be designed to be gender-neutral and free from discrimination.
With Respect to Existing Employees:
- Disclosure of Remuneration Criteria – employees must have access to objective and gender-neutral criteria according to which salaries and all other forms of remuneration are determined (e.g., qualifications, skills, responsibilities, working conditions, etc.).[1]
- Right to Information and Comparison – employees may request in writing information about their individual remuneration as well as the average pay levels by gender for comparable groups of employees; if no real reference person exists, a hypothetical reference person may be used. Employees must be informed of this right at least once a year.
- Protection Against Detriment and Right to Representation – employees may be supported in exercising the rights arising from the Directive by trade unions or other representatives.
- Invalidity of Confidentiality Clauses – contractual provisions that prohibit employees from discussing their remuneration in order to enforce the principle of equal pay are null and void.
Reporting
Another obligation for employers may be to report on the gender pay gap and any corrective measures for certain employees, where the reported pay difference exceeds a specified threshold.
The following information must be reported:
- Gender pay differences
- Gender pay differences in supplementary and variable pay components
- Median of gender pay gaps
- Median of gender pay gaps in supplementary and variable pay components
- Proportion of female and male employees receiving supplementary or variable pay components
- Proportion of female and male employees in each pay quartile
- Gender pay gaps between employees by employment group, broken down by regular base salary and supplementary and variable pay components
The employer’s reporting obligation, the reporting intervals, and the commencement of reporting depend on the size of the employer, i.e., the number of employees, as follows:
- Employers with 250 or more employees: annual reporting; first report by 7 June 2027
- Employers with 150–249 employees: reporting every three years; first report by 7 June 2027
- Employers with 100–149 employees: reporting every three years; first report by 7 June 2031
If the reporting reveals a difference of at least 5% in the average pay of women and men in any category, and this difference is neither justified by objective and gender-neutral criteria nor remedied within six months, a joint review of remuneration must be conducted in cooperation with employee representatives.
The joint review of remuneration includes the following measures:
- Analysis of the proportion of women and men in each employee group
- Information on the average pay levels of female and male employees, including supplementary and variable pay components, for each employee group
- All gender pay gaps within the average pay levels of each employee group
- Causes of gender pay gaps in the average pay levels, as well as the objective, gender-neutral criteria, if any, jointly determined by employee representatives and the employer
- Proportion of female and male employees whose pay was increased upon returning from maternity, paternity, parental, or caregiving leave, where such an increase occurred within the relevant employee group during the leave period
- Measures to address gender pay gaps, where these are not justified by objective and gender-neutral criteria
- Assessment of the effectiveness of measures resulting from previous joint remuneration reviews
III. Legal Consequences and Burden of Proof
Reversal of the Burden of Proof
If an employee brings a claim of direct or indirect pay discrimination and the employer has failed to comply with its transparency obligations, the burden is on the employer to prove that no discrimination occurred. This does not apply if the employer can demonstrate that the breaches of duty were unintentional and of minor significance. Insufficient compliance therefore increases the risk of a successful claim.
IV. Recommended Approach for Employers
- Quick Assessment
- Mapping of current remuneration structures, job classifications, and existing collective agreements
- Implementation of Transparent Recruitment Procedures
- Adjustment of job postings to include the salary range; where applicable, removal of questions regarding previous salary from application materials.
- Review of Contracts and Internal Policies
- Review and, where necessary, removal of confidentiality clauses related to remuneration, as well as updating data protection policies and internal communications.
- Preparation for Reporting Obligations and Analyses (if Applicable)
- Collection of data for the analysis of gender pay gaps; preparation of internal processes for regular reporting and for corrective measures.
- Technical and Legal Safeguards (if Applicable)
- Provide IT and reporting tools for the collection and anonymised processing of data.
The overview above is based on the wording of the Directive itself. The obligations set out therein must, however, be incorporated into Czech law transposing the Directive into national law. Therefore, for concrete obligations, deadlines, and the effects of this regulation, it is necessary to await both the text of the law and its entry into force.
Although it may be advisable to implement certain measures arising from the Directive at this stage, the text of the law is decisive for determining any potential liability issues and for establishing reporting obligations.
A more detailed overview with specific conclusions can therefore only be provided after the adoption of the national law transposing the Directive.