TRANSPARENCY IN REMUNERATION IS NEITHER A THREAT NOR A COMPLICATED ISSUE

One of the main causes of the gender pay gap is the fact that the situation is not transparent.
Female and male employees do not know how much they can ask for in a certain position, and
employers often derive their salary/wageThe main manager of the 22% TOWARDS EQUALITY project discussed
various aspects of transparency and refuted the most common concerns and objections.
s from their previous payment grade. The solution to
the situation should be the directive currently under discussion; however, many employers are
suspicious of it. The head of the 22% TOWARDS EQUALITY project Lenka Simerska discussed
various aspects of transparency and refuted the most common concerns and objections. 

Recently, transparency of remuneration has started to be talked about. But what is the
reality? How far have we progressed in this area?

Pay transparency is not currently regulated by legislation in our country. It is up to the
employer whether or not they have these principles embedded in their corporate culture. From
my own experience, I know that this is more a trend of large employers that have their
management located abroad. They have transparency principles already in place now. It
should be said, however, that in our country, the obligation of equal remuneration has been a
requirement of the Labour Code for many years; specifically, Section 110.

What changes can be expected in the near future?
The forthcoming European Directive will lead to changes. In 2019, the President of the
European Commission, Ursula von der Leyen, announced in her opening political speech her
intention to present it; in March this year, a draft directive (1) was submitted to the legislative
process. It is currently being discussed simultaneously in the Council of the European Union
and the European Parliament. Specifically, the deliberations in the Council, in which I take
part on behalf of the Czech Republic, are rather at an early stage. Member States ask
questions and clarify the Commission’s intentions concerning individual provisions and
compare them with the possible impact on their national legislation. On the basis of analyses
and research into the causes of the gender pay gap, the European Commission has assessed
non-transparency as one of the most important causes of the gender pay gap. Therefore, the
draft of the directive focuses primarily on mechanisms making remuneration more
transparent. People should be able to compare their wages with those of others doing the same
job or work of equal value in the organisation.

What are the ramifications of the directive? Will it be difficult for employers to comply
with it? 

Employers who have already embarked on the path of fair remuneration will find that
complying with the directive will not be a major problem for them. In a good company, for
example, there already is a clear and detailed salary/wage regulation which is the basis for
transparency.

The following key points will emerge from the directive: 
•    Employers will have to provide information on the starting level or on the range of

remuneration in the vacancy notice and before the job interview. Conversely, they will not be
able to ask potential employees to provide information on their previous salary.
•     Workers will have the right to request information from their employer on their personal
remuneration and on average remuneration levels broken down by gender for categories of
workers doing the same or equivalent work.
•     Employers with 250 employees or more must publish information on the gender pay gap
in their organisation. For internal purposes, they should also provide information on gender
pay gaps by categories of workers performing the same or equivalent work.
•     If pay reports reveal a gender pay gap of 5% or more and the employer cannot justify the
gap based on objective, gender-neutral factors, employers will need to review remuneration in
cooperation with employee representatives.
•     Workers who have been discriminated against in terms of remuneration based on their
gender may receive compensation, including full refunding of outstanding wages and related
bonuses or payments in kind.
•     The burden of proof will be on the employer. In a standard situation it will be on the
employer, not on the worker, to prove that there is no discrimination in terms of remuneration.
•     Member States should provide for specific sanctions for breaches of the equal
remuneration rule, including a minimum level of financial sanction.

What is the attitude of employers to the forthcoming changes? 
Since the publication of the draft, I have seen rather worried or negative reactions, mostly
stemming from ignorance of the issue. Many of the requirements of the directive can now be
addressed by employers and trade unions already; the obligations will just be given a specific
form, will be better targeted and controlled.
Where the situation is already set up correctly, there will be no need to work on it further.
To give an example: Trade unions already have the right to anonymised and gender-
disaggregated information on remuneration. Now, every male and female employee will have
this right, namely for job categories where the same or equivalent work is performed. If the
organization has job categorization and job descriptions set up well, as well as the
performance tracking tied to compensation, then there is no problem to obtain the average
across the levels of the same and equivalent work. If an employee finds themselves to be
below average, then again there should be no problem to show what the basis of their
appraisal is and how the situation could be improved if necessary.

The new reporting obligation 
What is new is the obligation to report, something that has been introduced in many countries
and which has been lacking in our country. The thing is that employers with 250 employees or
more will have to publish information on the gender pay gap. It will just be necessary to
specify what instrument will be used for this in our country. We are considering using the

existing data that employers report regularly as part of the compulsory statistics. In that case,
it would not be extra work for employers. Abroad, this is handled in various ways; in some
countries, there is an obligation for certification or a gender equality action plan.

Some employers cannot imagine how they will comply with the regulation, others see it
as an obstacle to the free market. What would your message for them be? 

Yes, that's true, I encounter that too. In particular, HR managers are concerned that they will
not be able to motivate employees by the means of remuneration. But it needs to be said out
loud that many of the current practices have nothing to do with the free market. If low pay is
based on information obtained during an interview (How much did you get in your last job?),
it has nothing to do with market principles. The employee must be given the chance to
demonstrate the skills for which he or she is to be evaluated. The tendency in the Czech
Republic is to reward male and female employees not according to the quality of their work
but according to how much they can “negotiate”, either during the interview or afterwards.

How can employers prepare for the directive and the new rules?
I think companies are afraid of a flood of new obligations. At the extreme, they are afraid that
someone will dictate how they should remunerate. But in reality, this is not the case. For
example, the salary range for a vacant position is usually predetermined by the budget.
Companies know how much they have for the person they are looking for, so there is no
reason why the information should not be included in the advertisement or not disclosed to the
candidate at the interview. After all, they invest in finding out the actual value of a particular
job in the market, for example by purchasing various scales, tools and surveys, and they set
the actual budget for job positions accordingly. A complete contractual freedom for both
parties, one that enables them to “wheel and deal” for any amount, is very rare and applies
perhaps to senior management positions.

There is a need to introduce order in remunerating 
In practice, it shows that many companies do not have their remuneration “in good order”.
The main challenge will be to make the internal remuneration system clear, to set the amounts
of salaries and performance-related components of the salaries for each category of job
positions, to describe them well, to classify them into levels and to clarify in which cases
there is equivalent work. When companies do this, they will then be able to easily, and in a
bulletproof way, demonstrate why one person makes this much and the other makes a
different amount. It will make sense to everyone and be easily reportable.

The Logib tool will help with the analysis of the situation 
For the third year running, the 22% TOWARDS EQUALITY project is offering employers
the opportunity to pilot the Logib tool, free of charge. This will calculate for them, based on
statistical regression, whether they have a gender pay gap and if so, where it originates. They

do not have to provide the data or measurement results to anyone. We will provide them with
the tool and include consultations. I encourage companies and institutions to start by assessing
their situation and think about what can be done about it. There is, of course, no uniform
solution because every employer has a completely different mix of job positions and activities
and therefore a different remuneration system.

Can you give an example from experience of how transparency will help?
I will give an example of a woman who joined an IT company after maternity leave. She
graduated from the Faculty of Mathematics and Physics at Charles University (MFF UK) and
had worked in the company for several years before maternity leave. They were looking
forward to her return because they needed someone for the given position urgently. No one
discussed remuneration with her and it didn’t occur even to her that they should have
discussed it. Covid came and the full time work at her home office. She, as an employee, was
happy to be able to work from home because it allowed her to simultaneously care for her
little daughter and take turns caring for her with her parents at her place of residence. In
addition, her partner had left her since he was not able to cope with the role of a parent. Not
an exceptional story. After about a year on the job, she was given the task of processing a
certain internal IT system thanks to which she got access to information about remuneration
and found out how much her colleagues in the company were paid. And she was totally
amazed. Firstly, she found out that, after maternity leave, she started to work for the same
money she was getting before the maternity leave but the general situation in the area of
remuneration had changed dramatically since she left. Secondly, she found out that her salary
did not increase even before maternity leave but because she didn't know she should have
asked for a raise, she never did. New people who came in, so to speak, from the market, got
much more than she did automatically. The maternity leave did not decrease her working
capabilities, so there was no reason for her to be paid less than anyone in a comparable
position. This woman now has a big dilemma about what to do. She is worried about what
will happen if she asks for more. She has a young child and is alone with her, she can't take
the risk. Yet, she knows that the company needs her and that they are happy with her work. It
might not be intentional on the employer's part. The employer may not even know that they
are discriminating and thus breaching the principle of equal pay for equal work and work of
equal value.

This is an example of the fact that employers cannot rely on employees to monitor the
correctness of their own remuneration. Nor can they rely on women being happy with less
money because they are not used to negotiating or because they are in a disadvantageous
situation. The principles of transparency, as introduced by the directive, will help to prevent
such situations.

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