At the end of last year, the Government of the Czech Republic published an Gender Pay Gap Action Plan for 2023-2026.[1] Although this is a strategic document addressed mainly to the relevant state administration authorities, it provides an interesting insight into the Government’s planned measures in the area of equal pay for equal work or work of equal value and the planned ways of enforcing and respecting the principle of equal pay. The Action Plan provides practical steps to address existing gender pay gaps, the first time the government has committed to addressing the gender pay gap in a separate document. Together with the adoption of the EU Pay Transparency Directive during our EU Presidency, the Government’s action plan represents an important step towards reducing pay discrimination against women.[2]
The article below summarises the key points of the Action Plan that may have practical implications for employers, outlines the reasons that lead to the significant pay gap and presents the measures proposed to reduce the pay gap, together with the anticipated legislative implications of the Action Plan.
Pay gap in the Czech Republic
In international comparison, the Czech Republic is one of the countries with one of the highest levels of gender pay gaps in the same job and in the same workplace. Published surveys show that gender inequalities persist in the Czech Republic and that gender discrimination is significantly higher than in other EU27 countries. For comparison, gender pay inequalities in Western European countries at the same job level are at most around 5%, while in the Czech Republic this figure is double. In particular, if we compare the wages of men and women in the same job (including private employment in the same workplace), the pay gap between women and men in the Czech Republic averages 10%. To be complete, it should be added that the calculations take into account the possible influence of age and educational attainment, which should not affect this calculation.
If we do not compare only the same occupations, the Czech Republic is still slightly worse off. The data presented in the Action Plan shows that in 2018, the overall gender pay gap in the Czech Republic equalled to 19%. From 2018 to 2020, this gap has slightly decreased from 19% to 17%, yet it is still one of the largest gaps in the EU. However, the above results show that the differences in the number of hours worked (e.g., due to part-time caring parent) between the two genders are on average very small and cannot explain the gender pay gap.
For an overall comparison, it is worth adding a look at the effect of educational attainment on pay. The published results show that the lowest pay gap is between men and women with elementary education, where the difference is “only” 15.3%. The figure is 22.2% for those with a high school education without a high school diploma, 19.3% for those with a high school diploma, and the highest for male and female university graduates, where the difference is a full 26.2%.
What is the reason for the big pay gap?
According to the published action plan, the main causes of the pay gap are horizontal and vertical segregation of the labour market, education, persistent gender stereotypes, lack of transparency in payments and limited opportunities to harmonize work and personal life (availability of care facilities, flexible forms of work, flexibility of maternity/parental leave).
In the context of transparency, it is stated that the methods used to determine the remuneration of individual employees are not transparent. In particular, male and female applicants are often not aware of their salary levels before starting to work, lack clear information on employers’ remuneration systems, policies and rules, or do not understand the information on payrolls.
Suggested measures
A set of tools should be used to address the pay gap, including, for example, ensuring access to information on pay systems and rules covering all components of salary or wages, availability of information on career progression opportunities in relation to financial remuneration, etc. In addition, effective tools should include informing male and female employees of their starting salary before they start work, as well as the right to request information on the average remuneration of people doing the same job or work of equal value distinguishing between women and men, reporting by companies of a certain size on the gender pay gap, and regular audits on remuneration.
Efforts to increase transparency aim to remove persistent taboos about pay levels. A socio-cultural environment in which pay levels are not discussed, combined with a lack of transparency in remuneration, is one of the main obstacles to closing the pay gap, with the result that unjustified pay gaps or discrimination often remain unidentified.
Fear of increased administrative burden for employers or fear of breach of confidentiality of remuneration information is often cited as the main argument against fighting transparency. At the same time, a number of countries have already added transparency measures. The right to request salary/wage information exists, for example, in Finland, Sweden, Portugal, Romania, Spain, etc. In addition, the European Commission has already called for increased transparency in its 2014 Recommendation.[3]
Another requirement to increase transparency, namely the explicit abolition/nullity of confidentiality clauses, which has already been enacted in Slovakia, can be described as ground-breaking. Indeed, employment contracts quite commonly include a clause negotiating an employee’s obligation of confidentiality about his/her income.
Another proposed measure to promote transparency is the introduction of an obligation to disclose salary or wages in job advertisements, whether in the form of a minimum remuneration or a certain financial range. Here, however, there is a concern that employers will circumvent the provision by disclosing an overly broad pay range that distorts actual pay or by stating inadequate minimum pay.
Enforceability of equal pay
The main problem associated with equal pay, or its transparency, is the difficulty of enforcing it. There is a very limited national case law on the issue (and no case law at all from the higher courts on the invalidity of confidentiality clauses). In addition to the aforementioned transparency and the fact that potential victims are unlikely to know about discrimination, procedural obstacles can also be considered a significant problem. These have traditionally included the cost and length of dispute, inconsistent application of reversal of burden of proof by the courts, or a lack of understanding of indirect discrimination.
Anticipated legislative impact of the Action Plan
The Action Plan presented by the Government[4] outlined a number of objectives and accompanying measures that will most likely be implemented in the Czech legal system in the future. Although this is not in the near future, here are selected objectives that employers can already focus on in their practice.
The first objective is to try to raise awareness of gender pay gap among trade unions and employees themselves. This objective should be achieved, for example, by extending the wording of the Labour Code and including an obligation for the employer to inform the trade union on average wages and salaries, including their gender-disaggregated components, or by extending the wording of the Labour Code by including an obligation for the employer to inform employees annually of this right.
Another objective is to introduce an information obligation on the employer’s side. This objective should be achieved, for example, by introducing a legal obligation for employers to define in writing an internal remuneration system, i.e., a wage regulation that would be then provided to the Labour Inspectorate on a request as a guide during pay gap inspections, or by extending the employer’s information obligation to job applicants regarding the basic component of the wage/salary, the remuneration from the agreement, or the range of remuneration offered.
As already mentioned above, another of the set objectives is the elimination of the existing practice of negotiating confidentiality clauses on wages/salary, thanks to the explicitly stated nullity of confidentiality clauses in the Labour Code.
The amendment to the Civil Procedure Code should also result in modification of the sharing of the burden of proof, the amendment should ease the evidentiary situation of employees who feel aggrieved by non-compliance with the principle of equal pay.
In the context of recent case law, the principle of equal pay for companies that are part of a group owned by the same person or controlled by a holding company or conglomerate should also be extended to the whole group. This step should prevent employers from setting up multiple subsidiaries in order to circumvent the principle of equal treatment. However, the proposal does not further specify whether this principle will apply only within the Czech Republic. In the case of a blanket (e.g. EU-wide) measure, this point would face a number of rather significant practical obstacles.
Other proposed objectives no longer directly affect employers, but rather emphasise institutional strengthening of certain entities or improving awareness of the issue, for example by educating judges or strengthening knowledge of equal pay and anti-discrimination issues.
Conclusion
Although there is a relatively long way to go towards the complete elimination of discrimination in the context of equal pay for employees, the adoption of the Pay Transparency Directive during the Czech Presidency of the Council of the EU, together with the Action Plan, represents a major step forward.
[1] https://www.vlada.cz/assets/ppov/rovne-prilezitosti-zen-a-muzu/Aktuality/Akcni-plan-rovneho-odmenovani-zen-a-muzu20232026.pdf
[2] https://www.vlada.cz/cz/ppov/rovne-prilezitosti-zen-a-muzu/aktuality/tz-nova-smernice-o-transparentnosti-odmenovani-posili-vymahatelnost-prava-na-rovnou-odmenu-a-pomuze-snizit-mzdovou-diskriminaci-zen-201893/
[3] https://eur-lex.europa.eu/legal-content/CS/TXT/HTML/?uri=CELEX:32014H0124&from=CS
[4] To be complete we would like to add that the Action Plan was prepared by the Ministry of Labour and Social Affairs in cooperation with the Department of Gender Equality of the Government in connection with the Strategy for Gender Equality 2021-2030 (https://www.tojerovnost.cz/cs/strategie-rovnosti-zen-a-muzu/).
