Under the EU Pay Transparency Directive, EU member states are required to transpose it into national law by June 7, 2026. However, the German federal government does not intend to transpose the EU Pay Transparency Directive into German law until early 2027, thereby allowing the specified deadline of June 7, 2026, to pass. Since the Pay Transparency Directive is in effect, it must be complied with even without a national implementing law.
The requirements and penalties set forth in the EU directive have been known for some time. They go far beyond the existing legal requirements of the Pay Transparency Act, which has been in effect since 2017. According to the Federal Ministry for Family Affairs, the directive is to be implemented "in a manner that is limited to what is necessary, as unbureaucratic as possible, and effective." In light of the economic situation, the timeline for implementation is being "moderately postponed." The directive is scheduled to take effect in early 2027. The reporting obligation and the right to information are set to take effect for the first time in June 2028.
It remains to be seen whether the EU will initiate infringement proceedings. However, the delay in transposing the directive into national law is causing uncertainty and does not protect employers from the directive’s requirements, as the EU directive can have direct effects even without a national transposition law. Thus, the EU directive applies Starting June 8, 2026 This applies directly to public employers. As for private employers, employees cannot invoke these provisions against a private employer (as long as the EU directive has not been transposed into German law). Nevertheless, it is reasonable to assume that German courts will interpret existing law more strictly in accordance with the directive (in the sense of the EU Pay Transparency Directive).
In their own interest, companies should therefore not wait for the national implementation of the directive. Rather, it makes sense to review their internal compensation structures and align them with EU requirements so as to ensure that discrimination based on gender is ruled out. Regardless of how the disclosure and reporting requirements are specifically structured, how the level of penalties is regulated, or whether a national implementing law grants preferential treatment to employers bound by collective bargaining agreements, the EU directive stipulates the following requirements:
Requirements for greater wage transparency under the EU directive:
Salary Transparency for Job Applicants: In the future, employers must inform applicants early on about the starting salary, its range, and any relevant collective bargaining agreements—for example, in the job posting or before the interview. Employers may no longer ask about salary in current or previous employment.
Employees' Right to Information: The right to information allows employees to request information from their employer regarding their individual income and average incomes—broken down by gender and by groups of employees who perform the same or equivalent work.
Reporting on the gender pay gap: Employers with at least 100 employees must publish information on the pay gap between male and female employees. In the initial phase, employers with at least 250 employees will be required to report annually, and employers with 150 to 249 employees will be required to report every three years. Five years after the deadline for implementing the directive, employers with 100 to 149 employees will also be required to report every three years.
Joint Compensation Assessment: If the pay report reveals a gender-based pay gap of at least five percent and the employer cannot justify the gap on the basis of objective, gender-neutral factors, the employer must conduct a pay assessment in cooperation with the works council.
Compensation for Employees: Employees who are subject to gender-based wage discrimination should receive compensation, including full back pay and any associated bonuses or benefits in kind.
Burden of proof on the employer: As a general rule, it is the employer—and not the employee—who bears the burden of proving that there was no discrimination with respect to pay.
Penalties, including fines: Member States should establish specific penalties for violations of the principle of equal pay (including minimum fines).
Class-action lawsuits: It is also envisaged that equal treatment agencies and employee representatives will be able to act on behalf of employees in court or administrative proceedings and take the lead in class-action lawsuits regarding equal pay.