What companies need to consider despite missing implementation

Pay transparency in Germany: What companies need to consider despite missing implementation

The implementation deadline for Directive (EU) 2023/970 expired on 7 June 2026. Germany has not yet transposed the directive into national law. As things stand, a first draft bill for the revised Pay Transparency Act is expected around the turn of 2026/2027. For companies, this means the current German Pay Transparency Act continues to apply for the time being. However, the lack of implementation does not mean that pay transparency can be put on hold until new legislation is adopted.

Pay equality under current German and European law

Until any new provisions are enacted, the Act to Promote Pay Transparency between Women and Men (EntgTranspG) remains applicable. Under section 3(1) EntgTranspG, direct or indirect discrimination on grounds of gender in pay or pay conditions is prohibited for equal or equivalent work. To check compliance with this rule, employees in establishments with more than 200 employees under the same employer can request information about the average monthly gross pay for equal or equivalent work. This information must generally be provided within three months and refers to the statistical median of the reference pay.

Article 157(1) of the Treaty on the Functioning of the European Union (TFEU) also applies. This European provision requires equal pay for equal or equivalent work. Claims for equal pay can therefore already be based directly on Article 157(1) TFEU as well as on sections 3(1) and 7 EntgTranspG.

The Federal Labour Court (Bundesarbeitsgericht – Germany’s highest employment court) further clarified these principles in its judgment of 23 October 2025, ref. 8 AZR 300/24. A claim for pay equality can therefore be based on comparison with a single person of the other sex performing equal or equivalent work. This applies even if there are several comparable employees of the other sex. If the employee demonstrates a lower pay and equal or equivalent work, the employer must explain and prove that the difference is based on objective, non-gender-related factors.

The lack of implementation of Directive (EU) 2023/970 does not change these already existing entitlements. From the expiry of the implementation period, German courts are required, however, to interpret the existing law as far as possible in conformity with the directive. Accordingly, the directive can influence the interpretation of undefined terms and the further development of existing legal principles, insofar as this is compatible with German law.

What will change for companies with the EU directive

The main changes for companies concern procedures for recruiting, setting pay, providing information and reviewing remuneration. Already in the application process, candidates must be informed of the intended starting pay or its range. Questions about previous pay should generally no longer be permitted. Likewise, pay setting and development must be based on objective, gender-neutral criteria. In future, employees will be able to request, regardless of company size, information about their own pay and the average pay of comparable employees. The information must generally be provided within no more than two months and include gender-disaggregated average figures.

The reporting threshold is to be gradually lowered to include employers with 100 or more employees, so that a much larger group of companies will be covered. If the pay report shows a gender pay gap of at least 5 percent for a comparison group which cannot be justified objectively and neutrally and is not corrected within six months, employers and employee representatives are obliged to conduct a comprehensive pay assessment together. The directive also provides for broader compensation and damages claims, easier enforcement, and additional sanctions, which may include fines for companies. Exactly which sanctions and fine provisions will apply in Germany will not be known until the German implementing statute is passed.

What companies should prepare for now

Companies should review their remuneration structures using objective and gender- neutral criteria. The European directive names as minimum criteria: skills, burdens, responsibility and working conditions. For each comparison group it should be transparent why jobs are classified as equal or equivalent and what justifies any pay differences. At the same time, the data required for such comparisons should be fully available and evaluable, particularly as regards comparison groups, average pay and variable pay components.

Documentation of pay bands, allowances, bonuses and individual exceptions is especially important. A pay decision should be explicable, even years later, by objective reasons. Recruiting processes, job advertisements and questions about previous pay should also be reviewed. In addition, companies should define responsibilities and standardised procedures for future requests for information from employees, test the necessary data and reporting systems, and involve employee representatives at an early stage where such exist.

Data protection should also be considered, since pay transparency requires the processing of employees’ personal data. Companies should therefore clarify who is responsible, who has access, how data are anonymized, and how the data protection officer is involved.

Anyone who waits for the German implementing act is merely waiting for the final form of additional requirements. The requirement of equal pay for equal or equivalent work already applies.

Note on French law

France has had its own transparency instrument since 2018. The “index de l’égalité professionnelle femmes-hommes” (index for professional gender equality) applies to companies with 50 or more employees and is calculated annually on a scale of up to 100 points. For companies with 50 to 250 employees, four indicators are included: gender pay gaps, differences in individual pay increases, pay rises after maternity leave and the share of women among the ten highest-paid employees. For companies with more than 250 employees, an additional indicator relates to differences in promotions.

The results of this index must be published every year, by 1 March at the latest. Depending on the score, specific improvement goals and further measures may be required. If results are not published, if measures are missing, or if the index is less than 75 points for three consecutive years, fines of up to 1 percent of the total payroll can be imposed.

Thus, even before the directive is transposed, the French legal framework is already more focused on regular publication and government auditability of key figures than the current German Pay Transparency Act.