Another regulation on the way: large Czech companies must have a mandatory share of women in management

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Large trading companies in the Czech Republic should ensure a balanced representation of women and men in their management. Women should make up at least a third of it. The selection of board members and councils should be transparent with clear and unambiguous criteria. The draft law to support balanced representation, published on the government’s website, takes this into account. According to the documents for the law, the changes in the Czech Republic would affect five companies and banks.

On average, women hold 32.2 percent of seats in company management in the EU. In the Czech Republic, it is 21 percent. The Czech Republic is thus ranked 20th out of 27 and has been criticized for a long time for the low share of women in management and little progress in increasing it. The proposal is thus added to a number of regulations that have affected business in the Czech Republic or are expected to affect it in the future, the tightening of labor law was brought about by an amendment to the Labor Code, a consolidation package, and “next to the line” is, for example, a proposal to give employees the right to inquire about the amount of wages in a workplace.

“The current legal situation does not have a positive impact on the balanced representation of women and men in the leading bodies of business companies. It does not encourage and support women in their efforts to become members of the management bodies of companies. The current legal status is outdated from the perspective of achieving a more balanced representation of women and men. Persistence of this condition would not bring improvement,” the authors said. They noted that more progress was made in states where the measures were mandatory. In the documents, they reminded that, according to studies, an increase in the proportion of women leads to higher performance, success and competitiveness of companies.

The rules are regulated by last year’s European directive on improving the gender balance among members of the bodies of listed companies. The Czech Republic must adopt the regulation by December 28. According to the documents, it adopts it in a minimalist form and the Czech legal system does not change more than European law requires.

According to the upcoming law, the requirements for balanced representation should apply to companies with more than 250 employees and an annual turnover of more than 50 million euros, or assets of more than 43 million euros. They should either have at least 40 percent of women in the supervisory and administrative boards, or they should have at least 33 percent of them in the board of directors and boards together. This also applies to men, should they find themselves in the minority in leadership. According to the documents, the law would apply to the companies ČEZ, Komerční banka, Moneta Money Bank, Philip Morris CR and Kofola Československo.

According to the proposal, the recruitment of councils should be transparent and non-discriminatory, and the rules must be clear, neutral and unequivocal throughout the entire period from preparation to preliminary and short selection as well as the determination of groups of candidates. If the company does not meet its target for the proportion of women and men, it will give priority to the one who belongs to a less represented group out of two candidates with comparable qualifications and prerequisites. If the company did not do this, the non-preferred candidate could turn to the court and request “satisfaction, including compensation for non-pecuniary damage in money”. The company would have to prove that it did not make a mistake.

According to the documents, the companies should achieve a balanced composition in their management by half of 2026. They should publish information about the progress and selection of candidates. Failure to follow the procedure would result in fines. The Czech National Bank would monitor the status of those to whom it granted a business permit or license. Others would be controlled by a government office. Departments, trade unions or employers can send comments until the end of February.

The article is in Czech

Tags: regulation large Czech companies mandatory share women management

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