Pay Transparency Directive not implemented on time
The deadline for transposing the Pay Transparency Directive expired on June 7, 2026. However, Germany has not yet transposed DIRECTIVE (EU) 2023/970 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of May 10, May 2023 on strengthening the application of the principle of equal pay for men and women for the same or equivalent work through pay transparency and enforcement mechanisms into national law.
Many employers are therefore wondering what impact the expiry of the implementation deadline will have and whether action needs to be taken now. Although the Pay Transparency Act (EntgTranspG) has not yet been brought into line with the requirements of the Directive, this does not mean that the new regulations are irrelevant until an implementing act is passed.
The following overview sets out the changes envisaged by the Directive, the obligations employers will face in future, and the practical consequences that the lack of implementation to date may already be having.
Objective fee structures will become mandatory
Under Article 4 of the Directive, employers must establish pay structures that ensure equal pay for equal work or work of equal value.
The assessment is based in particular on skills, workload, responsibility and working conditions. Depending on the role, additional job-related criteria may also be taken into account. All criteria must be applied in a gender-neutral and non-discriminatory manner. The guideline expressly emphasises that social skills, in particular, must not be systematically undervalued.
In addition, appropriate methods and tools for assessing the value of work must be established.
The right to information is being significantly expanded
One of the most significant changes concerns employees’ right to information. Under Article 7 of the Directive, employees are entitled to information about their individual pay and the average pay levels of employees performing the same or equivalent work.
A right to information already exists under Section 10 of the EntgTranspG. However, the Directive makes it considerably easier to exercise this right.
In future, this entitlement is to apply regardless of the size of the company. Furthermore, the directive does not require the identification of a comparable role, as was previously the case, and this requirement is therefore likely to be dropped.
Article 7(3) of the Directive is also particularly relevant. Under this provision, employers must inform all employees annually of their right to information and the steps required to exercise it. There is therefore a strong case to be made that employees will in future be able to request such information on a regular basis.
The response must be provided in writing and no later than two months after receipt of the request for information (Article 7(1) and (4) of the Directive).
The Directive also introduces new transparency requirements in the recruitment process. Under Article 5 of the Directive, applicants are entitled to information regarding the starting salary or the expected salary range for the advertised post. In addition, where applicable, the relevant collective agreement provisions must be disclosed.
New reporting requirements for many companies
Reporting obligations are also set to be significantly expanded. Whilst Section 21(1) of the EntgTranspG currently applies only to employers with more than 500 employees, the obligation under Article 9 of the Directive is intended to apply to companies with at least 100 employees.
In future, employers will be required to report on existing pay gaps between male and female employees and to submit certain pay-related information to the relevant authorities.
The scope of these reports goes well beyond the current requirements. Article 9(1) of the Directive provides for comprehensive disclosure of various remuneration-related indicators.
The deadlines depend on the size of the company:
- 100 to 149 employees: initial reporting by 7 June 2031, followed by reporting every three years,
- 150 to 249 employees: initial reporting by 7 June 2027, followed by reporting every three years,
- 250 or more employees: initial reporting by 7 June 2027, and annually thereafter.
In future, the burden of proof will more often lie with the employer
Article 18 of the Directive deserves particular attention.
In future, it will be sufficient for employees to present facts that give rise to a presumption of pay discrimination. In such cases, the burden of proof lies with the employer. The employer must prove that there has been no breach of the principle of equal pay.
For employers, this means a significantly more challenging legal situation.
What does the lack of implementation in practice mean?
The key question is: what impact is the directive already having, even though there is still no German implementing legislation?
In principle, European directives do not have direct effect between private individuals. However, national courts are obliged to interpret existing law in a manner consistent with the directives. Once the transposition period has expired, this obligation becomes even more important.
Whilst it is not permissible for the courts to anticipate the directive in its entirety through judicial interpretation, existing national provisions may be interpreted in the light of the directive.
Furthermore, the Directive is based on the principle of equal pay, which is already enshrined in EU law. This principle is set out, in particular, in Article 157(1) TFEU and Article 23(1) of the Charter of Fundamental Rights.
The situation is likely to be different with regard to the thresholds set out in the EntgTranspG. The restrictions on the right to information and reporting obligations to specific company sizes are based on deliberate decisions by the German legislature. It therefore seems difficult to justify extending these thresholds solely through judicial interpretation.
It is also important to note that, under Article 9(10) of the Directive, employers must eliminate gender-based pay gaps within a reasonable period of time.
It is not only an upward adjustment that is possible. Provided that existing entitlements do not preclude it, a downward adjustment may also be permissible. Unlike the courts, which can in principle only make upward adjustments, employers have greater flexibility in this regard.
The Directive also provides for sanctions and fines. However, the current EntgTranspG does not contain any corresponding provisions on fines. This, too, is a deliberate legislative decision that cannot simply be circumvented by interpretation.
Conclusion: Act now rather than wait and see
Even though the Pay Transparency Directive has not yet been implemented in Germany, there is no reason for employers to put this matter on the back burner.
Although fines for breaches of the Directive are not currently expected, the growing importance of interpreting the Directive correctly and the significantly more employee-friendly allocation of the burden of proof in future are already increasing the risk of costly disputes over pay.
Companies should therefore review their remuneration structures at an early stage, identify any potential instances of unequal treatment, and prepare in good time for the upcoming transparency requirements.
Verwendete/vertiefende Literatur:
öAT 2025, 26; NZA-RR 2023, 568; NZA 2026, 637; EuZA 2024, 140
