Interview with Adela Krbcova, Partner, and Director for the Czech Republic, published by penize.cz on 16 July 2025
Author: Katerina Hovorkova
Translated into English
The Czechs, and indeed the whole of the European Union, have gone down the road of salary transparency. The established practice of not saying how much someone earns is to be done away with by new rules in the Labour Code and EU directives. Adéla Krbcová, an expert in employment law at the PETERKA PARTNERS law firm, explains what is already in force and what is still in the pipeline.
Adéla Krbcová
- Is an attorney-at-law, Partner and Director of the Czech office of the international law firm PETERKA PARTNERS;
- She specializes in mergers and acquisitions, corporate law and, in recent years, employment law. Among other things, she advises on the negotiation and termination of employment, setting remuneration models, collective bargaining, and the introduction of modern technologies in the labour sphere;
- She cooperates with companies from various sectors, in particular trade, services, IT, pharmaceuticals, and the automotive industry.
Transparent remuneration is a hot topic right now. It is partly addressed by the Flexi-Amendment to the Labour Code, which has now, from June 2025, abolished pay confidentiality clauses. What does this mean for employees? What can they now say without fear of any consequences?
Employers must not restrict employees from sharing information about the amount and structure of their own wages, salary, or remuneration under the agreement. This gives employees the opportunity to talk about how much they make and what their pay consists of (structure, bonuses, etc.). They can basically tell anyone they want, this typically means colleagues.
Does the abolition of the confidentiality clause also mean that I can go to my manager and ask him how much a colleague earns? And can I also ask about the remuneration of, say, my supervisor or even the director?
It doesn’t. Information about the remuneration of a given employee is personal information which must be treated as such and is subject to the obligation of confidentiality. Employees can only freely disclose information about their own remuneration. General confidentiality clauses concluded, for example, with Human Resources or payroll employees who have access to information on other employees’ salaries and are not allowed to disseminate that information anywhere are still valid and enforceable. You will not know how much the CEO of your company makes unless he/she tells you.
What was the threat to employees who had a confidentiality clause in their contract before May? What if they discussed their pay with their colleagues, for example, and it was brought to the attention of management? Did you encounter any fines for failure to maintain confidentiality?
Usually, the confidentiality clauses about pay had more of a psychological effect. They discouraged employees from spreading information about their remuneration. Sometimes the breach of such clauses was listed, for example, in a list of breaches of duties that could lead to termination of employment.
Thus, if an employee had breached the clause in the past, a warning regarding a breach of a work-related obligation and the possibility of termination by notice, was likely to follow. However, it is questionable whether the termination notice would have stood up in court. The enforceability of confidentiality clauses was already questionable before the amendment, to say the least.
Although the law did not explicitly prohibit them, they had been challenged by the Ombudsman for some time. The clauses were also in the spotlight of labour inspectorates. I experienced inspections where inspectors asked about these prohibitions or deliberately looked for them in specific contracts or internal regulations and reproached employers for their existence. However, even this approach was problematic given the ambiguity of the law.
Employees were not realistically threatened with fines, penalties or other monetary sanctions for violating the clause. Indeed, an employer may not fine an employee for breach of his or her obligations under the employment relationship. The penalty would have to be provided for directly by law, as is the case, for example, where an employee breaches a non-compete agreement after the employment has ended and the employer has negotiated such penalty with the employee.
If I have a clause in an older contract, does my employer have to have me sign an addendum to the contract cancelling it? Otherwise, does the employer face a hefty fine?
If the clause is part of an individual contract, then it is ideal to enter into an addendum deleting the clause from the contract. This requires the employee’s cooperation.
Of course, it may not be possible to negotiate and conclude the amendment immediately. I would then strongly recommend that the employer at least issue a notice informing the employees that these clauses are no longer effective as of 1 June 2025 and therefore will not be enforced in any way. It should make the notice demonstrably known to all employees. In the event of an inspection by the Labour Inspectorate, it is the employer who will have to prove that it is not restricting employees in this respect. Otherwise, the employer can be fined up to CZK 400,000.
If there is a similar prohibition in an internal regulation, then the employer has it easier. It unilaterally changes the regulation and informs the employee of this, as in the case of other changes to internal regulations.
Why did confidentiality clauses exist in the first place, what was their purpose?
We have come across some form of confidentiality clauses on salaries or similar prohibitions quite often. For example, the Chamber of Commerce’s 2020 survey mentions that only one-quarter of the members surveyed had not set such a prohibition or restriction internally. The Ombudsman considered restrictive salary confidentiality clauses to be unlawful in principle, as in his view the practice encouraged unequal pay and prevented employees from defending themselves effectively.
In my view, this was not always the case. Wage information has long been considered sensitive by both employers and employees. Employers have also often considered remuneration to be part of their business strategy or even a trade secret. This may have been a competitive advantage in recruiting or retaining employees. Employers thus tried to prevent competitors from finding out about a particular professional’s remuneration.
As you pointed out at the conference organized by the French-Czech Chamber of Commerce on unequal pay between men and women, another important document is being prepared in this area. It is an EU directive, which is due to be transposed into Czech law by June next year, and which is intended to reduce the large differences between men’s and women’s pay. What exactly will it bring?
It is the implementation of a European Union directive that strengthens the application of the principle of equal pay for men and women, known as the Pay Transparency Directive. Member States are to implement it in their legal systems by the beginning of June 2026 at the latest. The Directive brings a number of obligations that could be collectively described as information, structural-organizational, and reporting obligations. The reporting obligations in particular have attracted some criticism, as employers are perhaps rightly concerned about the increased administrative burden.
The Czech version of the directive is still being fine-tuned by the Ministry of Labour and Social Affairs, but you already have some information on what should be in the document. What will change for employees on the one hand and for employers on the other; what rights and obligations will they have?
During the aforementioned June forum on Equal Pay organized by the French-Czech Chamber of Commerce under the auspices of the French Embassy, a representative of the Ministry indicated that the new legislation should reflect only the minimum requirements of the directive. However, there are elections forthcoming and the subsequent formation of a government ahead of us. Moreover, it is no secret that the Czech implementation of European regulations can be surprising. So, we shall see.
In any case, the directive requires job applicants to be informed in advance of the starting salary or its range, for example, in an advertisement or before the interview itself. Employers will not be allowed to ask about candidates’ salary history. Advertisements will have to be gender-neutral, but this is not new.
Employees will be able to ask employers for information about their individual pay levels and average pay levels by gender for categories of employees doing the same or comparable work. Related to this, employers will have to consistently categorize jobs on the basis of certain non-discriminatory and objective criteria and put in place appropriate remuneration structures.
This may, of course, be challenging for some employers and they should therefore already start preparing or at least mapping out the situation as soon as possible. They should also be aware of who actually decides on remuneration, as the Directive works with a single source, which is not necessarily the employer’s board of directors, but theoretically also the management of the parent company.
Finally, large employers will report on the gender pay gap. This information will be provided for the first time in 2027, but this means that it will already be based on data for 2026. The directive also strengthens procedural protection for employees claiming equal pay and any compensation they may receive.
Recently, three of the largest employers’ and business organizations in the Czech Republic sent a letter to the Minister of Labour and Social Affairs, Marian Jurečka, asking for the implementation of the Directive into Czech law to be postponed by two years, arguing that companies are not ready. Will it really be that complicated for companies to implement the new rules?
The Czech Republic has for a long time very strictly regulated equal pay. The Labour Code lays down specific exhaustive criteria according to which equal pay can be set and provided to comparable employees. In recent years, equal remuneration has increasingly come under the spotlight in practice. It is addressed by employees, labour inspectorates, and the courts.
And it’s not just about equal pay for men and women, but for all employees doing the same job or work of equal value in general. One of the most famous cases is the Czech Post case, where the courts concluded that a criterion for differential pay is not differences in the socio-economic conditions of regions in the Czech Republic. Such an approach is rather unique in the European context.
It is also important to note that the Directive will be gradually implemented by all EU Member States, so, as in previous cases of European regulation, multinationals will themselves try to unify their processes as much as possible in all countries where they operate. This will put pressure on their subsidiaries to adapt to the new regulation even in countries where local regulation is delayed.
With our law firm operating in nine countries in the CEE region and representing a number of major employers operating across Europe, we are already working to prepare for the new obligations. We are closely monitoring the legislative developments in individual EU countries, with Poland recently adopting new legislation relating specifically to recruitment transparency. Clients and their management are thus gradually being introduced to the issue. In the Czech Republic, these checks could also be combined with a review and update of processes in connection with the Flexi Amendment to the Labour Code. The details will, of course, be fine-tuned once the applicable national regulations are in place.
If the directive is in force from next year, do you think it will succeed in reducing the gender pay gap to five per cent as required? Currently, according to the latest available data from the Ministry of Labour, the gender pay gap in the Czech Republic was almost 18 per cent in 2022, and even 22 per cent for managerial positions.
Employers, who will be obliged to report on the gender pay gap, should also jointly assess remuneration in cooperation with employee representatives if they find an unjustified gender pay gap of at least 5 per cent in any category that they have not corrected themselves. According to the Directive, this should be done within six months of the submission of a specific report.
It is very difficult to say whether the directive and its implementation at the local level will be able to erase or significantly reduce the gender pay gap, or how quickly. Experience from other countries shows that a directive can produce results faster than recommendations or public pressure alone. However, it depends on how the relevant obligations are set up and whether they are effectively enforced.
It is also necessary to explain the regulation properly and clearly and to give employers time to prepare. This is not often the case with amendments to Czech labour law. Particularly for smaller employers, the state could help with the set-up, at least initially, e.g., with appropriate methodologies or training. It would also be advisable to link the regulation to other regulations so that obligations, especially administrative and reporting data, are not unnecessarily duplicated.
In any case, I think that employers should not take a negative view of the whole area of equal pay a priori, but see it as an opportunity for growth, sustainability and branding as a fair employer.
In the context of equal pay, there is also talk of introducing mandatory quotas to ensure a certain percentage of women in management. Do quotas make sense? Even a number of high-ranking female managers in the Czech Republic oppose them.
Quotas are the subject of another EU directive, namely the directive on improving the gender balance among directors of listed companies. According to a draft amendment to the Capital Market Undertakings Act and other regulations, which has been stuck in the Chamber of Deputies for quite some time, the quotas would only apply to listed companies with an average of at least 250 employees and whose annual net turnover exceeds EUR 50 million or whose total assets exceed EUR 43 million.
These companies should set themselves the objective of achieving a balanced representation of men and women in their management bodies, typically on boards of directors, supervisory boards, and administrative boards. They would have a choice of two options. Either to achieve at least 40% of non-executive directorships or 33% of all directorships, i.e., with less gender representation. In most cases, these would be women. It would be mandatory for companies to achieve the chosen objective by introducing transparent recruitment procedures. In the Czech Republic, this would apply to a minimum number of companies. Some of them already meet these percentages without legal regulation.
Personally, I do not prefer quotas. In our law firm, we have achieved a high number of women in managerial positions in a natural way, by continuously supporting their career growth. I understand most of the arguments of those who oppose quotas. Among other things, there is a concern about whether the abilities of women in management would be devalued by some colleagues or parts of the public with reference to quotas. On the other hand, experience from abroad shows that countries that have gone down the route of hard quotas before, whether Norway or France, have achieved a much higher representation of women in top management than countries that do not have legal quotas.
