Tax and Legal News – June 2026

So how much do you actually make?

The EU Directive on Pay Transparency is changing the rules of the game: a topic that has been discussed in whispers for years is now set to be underpinned by systems, data and more open communication.

Based on my own professional background and experience with various client projects, I can confidently say that for many years, one of the fundamental rules in Czech companies was the principle “you don’t talk about money.” It’s actually quite a convenient rule. It acts as a kind of social mute button: when no one talks about pay, no one gets offended, no one breaks a sweat trying to explain things, and everyone can pretend that the system is fair simply by virtue of the fact it exists.

But reality has an unpleasant tendency to reveal itself from time to time. It might be quite innocently—in the morning in the breakroom by the coffee machine. Two people, similar jobs, similar responsibilities, similar tenures at the company. One mentions something about a mortgage, the other about daycare, then energy prices come up, and, finally, the sentence decent people don’t say out loud is uttered: “So how much do you actually make?”

Whatever the answer, very often that’s the start of something hard to shake—a sense of injustice. Sometimes warranted, sometimes not. But always unpleasant. Mainly because when it comes to compensation, that feeling is often all we have, given the lack of information and transparency.

And this brings us to why the European Union has decided it will no longer leave the issue of equal pay solely up to “goodwill” and corporate culture. Although the principle of equal pay is nothing new, in practice it is often difficult for employees to enforce—precisely because of a lack of information and transparency. The Pay Transparency Directive aims to shed light on this practical issue and provide clarity where corporate rules once created ambiguity, thereby turning equality into something that cannot only be proclaimed, but also verified.

As regular readers of our Tax and Legal News may have guessed, implementing the new rules will not be easy. The Czech legislative process traditionally follows its own rhythm. According to the available draft transposition bill from the Ministry of Labor and Social Affairs, the majority of the rules are only expected to take effect on 1 January 2027, while certain provisions—particularly regular reports on pay gaps and employees’ right to request detailed information—will not take effect until 1 January 2028. In other words: the European ambition is “as soon as possible,” while the Czech reality is “the main thing is to go gradually.”.

What’s new about it?

The main new element here is that compensation is no longer based on silence and traditions like “that’s just how we do things”; instead, companies are now expected to have a system that is transparent, explainable and justifiable. It’s a bit like accounting: it’s not enough that the numbers “somehow add up”—what matters is that you can demonstrate the rules you used to arrive at those figures. In practical terms, this means employers will have to establish and maintain a transparent compensation system that is made available to employees in an internal policy or collective bargaining agreement—that is, in a form that is not merely an “oral tradition” but an actual rule.

At the same time, the definition of what exactly constitutes “remuneration” will be clarified. The Czech proposal treats remuneration as wages, salary or compensation under a contract, and also addresses the system of other monetary and in-kind benefits, if provided by the employer, and requires that these benefits also be based on objective and non discriminatory criteria.

The change also affects the hiring process: candidates should not enter negotiations without prior knowledge, but should be provided with information about the starting salary or its range in advance, before contract negotiations begin. While the directive recommends including this information in job postings, the Czech draft, as currently proposed, does not explicitly require this.

And within companies, another change is coming: employees will be able to request information not only about their own compensation but also about the average compensation within their job category, broken down by gender, and employers will have two months to respond. In certain situations where providing the information could effectively “reveal” a specific individual’s compensation, the information is to be provided to the Public Defender of Rights instead of the requester.

For larger employers, the issue goes a step further: the proposal calls for regular reports on pay gaps and related follow-up processes. And if a pay gap of at least 5% between men and women is found in a particular job category—one that is unjustified and not corrected within the specified timeframe—this will trigger the obligation to conduct a written pay assessment and implement corrective measures. Moreover, this isn’t just a “recommendation to be filed away” — the proposal introduces administrative offenses and penalties, with fines of up to CZK 1,000,000 for the most serious cases (such as failure to establish a compensation system).

And this brings us to why the European Union has decided it will no longer leave the issue of equal pay solely up to “goodwill” and corporate culture. Although the principle of equal pay is nothing new, in practice it is often difficult for employees to enforce—precisely because of a lack of information and transparency. The Pay Transparency Directive aims to shed light on this practical issue and provide clarity where corporate rules once created ambiguity, thereby turning equality into something that cannot only be proclaimed, but also verified.

As regular readers of our Tax and Legal News may have guessed, implementing the new rules will not be easy. The Czech legislative process traditionally follows its own rhythm. According to the available draft transposition bill from the Ministry of Labor and Social Affairs, the majority of the rules are only expected to take effect on 1 January 2027, while certain provisions—particularly regular reports on pay gaps and employees’ right to request detailed information—will not take effect until 1 January 2028. In other words: the European ambition is “as soon as possible,” while the Czech reality is “the main thing is to go gradually.”.

What’s new about it?

The main new element here is that compensation is no longer based on silence and traditions like “that’s just how we do things”; instead, companies are now expected to have a system that is transparent, explainable and justifiable. It’s a bit like accounting: it’s not enough that the numbers “somehow add up”—what matters is that you can demonstrate the rules you used to arrive at those figures. In practical terms, this means employers will have to establish and maintain a transparent compensation system that is made available to employees in an internal policy or collective bargaining agreement—that is, in a form that is not merely an “oral tradition” but an actual rule.

At the same time, the definition of what exactly constitutes “remuneration” will be clarified. The Czech proposal treats remuneration as wages, salary or compensation under a contract, and also addresses the system of other monetary and in-kind benefits, if provided by the employer, and requires that these benefits also be based on objective and non-discriminatory criteria.

The change also affects the hiring process: candidates should not enter negotiations without prior knowledge, but should be provided with information about the starting salary or its range in advance, before contract negotiations begin. While the directive recommends including this information in job postings, the Czech draft, as currently proposed, does not explicitly require this.

And within companies, another change is coming: employees will be able to request information not only about their own compensation but also about the average compensation within their job category, broken down by gender, and employers will have two months to respond. In certain situations where providing the information could effectively “reveal” a specific individual’s compensation, the information is to be provided to the Public Defender of Rights instead of the requester.

For larger employers, the issue goes a step further: the proposal calls for regular reports on pay gaps and related follow-up processes. And if a pay gap of at least 5% between men and women is found in a particular job category—one that is unjustified and not corrected within the specified timeframe—this will trigger the obligation to conduct a written pay assessment and implement corrective measures. Moreover, this isn’t just a “recommendation to be filed away” — the proposal introduces administrative offenses and penalties, with fines of up to CZK 1,000,000 for the most serious cases (such as failure to establish a compensation system).

Why am I actually writing all this in an editorial?

I chose the topic of fair pay for our editorial because it has been a hot topic among our clients lately. Equal pay is a typical “social issue”: everyone agrees with it, as long as it doesn’t directly affect their pay scales, budgets and decisions. However, the new European regulation and its Czech implementation are shifting the focus from declarations to practice—from “equality on paper” to a system based on access to information, transparency and systematic monitoring.

And this brings us back to that morning meeting in the kitchen by the coffee machine. It’s quite possible that the biggest change won’t be found in a legal clause or a report table, but in the fact that conversations like this will cease to be taboo and become a normal part of work life. For employers, this is uncomfortable only until they realize that transparent rules—however tedious to implement—are often better than protracted speculation, reputational damage and disputes that arise in an environment where “nothing is said” and “everyone is suspicious.”.

In closing, I wish our readers success in ensuring their compensation systems stand up not only to regulatory scrutiny, but also to the strictest of auditors—their own employees. And if the question “where to even start” just crossed your mind, know that the first step is usually neither the most expensive nor the most complicated: it is simply the decision to stop relying on silence and start relying on transparent rules.