5 minute read | June.12.2026
The EU Pay Transparency Directive (Directive (EU) 2023/970, the "Directive") took effect on June 6, 2023. Member states were required to transpose it by June 7, 2026. As discussed in our previous update, The EU Pay Transparency Directive – What Employers Need to Know. The Directive introduces significant new requirements on pay transparency and equal pay across the EU.
Germany has not yet implemented the Directive. A draft bill from the responsible Federal Ministry is still not available, and legislative changes to the German Pay Transparency Act (Entgelttransparenzgesetz, the "GPTA") are expected to follow in accordance with the Directive with considerable delay. The Directive is significantly more far-reaching than the GPTA and will require substantial changes to national law.
Employers should act now despite missing implementation of the legislation. This article outlines steps to prepare for the tightened legal landscape.
Although Germany has missed the implementation deadline and no draft legislation is currently available, employers cannot simply wait. The GPTA has existed since 2017 and specifies European legal requirements on pay equality.
Even without implementing legislation, German courts are obligated to interpret statutory law such as the GPTA in line with the Directive's wording and purpose. This becomes increasingly relevant following the expiry of the implementation deadline. However, directive-conform interpretation is only possible where the legal framework leaves room for interpretation.
For example, German courts are expected to interpret the following areas in compliance with the Directive:
However, there are limits to judicial interpretation. Courts cannot introduce obligations that the legislature has reserved for statute. This will most likely concern new pre-hire transparency duties (for example, stating salary ranges in job ads or expanding reporting duties to smaller companies). Creating such obligations by interpretation could be impermissible and could violate the rule of law principle of legal certainty and the separation of powers. That said, courts might read existing civil sanctions more broadly and, for serious violations, award higher compensation than has been customary.
The Directive expects employers to proactively inform employees about pay‑setting criteria, pay levels, and pay trends. It also grants employees an individual right to information. On request, employers must provide information, broken down by gender and by groups of employees, on average pay for the same or equivalent work. This obligation applies regardless of the company's headcount and size.
The Directive defines “work of equal value” based on objective criteria, including skills, effort, responsibility, and working conditions. Employers should review how they categorize and compare roles.
Employees will probably increasingly assert such information rights, but with expanded expectations regarding the scope of information to be provided.
Employers should consider:
Employers should establish clear internal responsibilities and processes for pay transparency compliance as follows:
In equal pay disputes, employers should expect a stricter burden of proof. This means employers must be prepared to demonstrate that pay differences are justified by objective, gender-neutral factors. Decisions on starting salaries, individual allowances and promotion-related pay changes, should be justified and documented in a comprehensible manner.
The Directive gives "employee representatives" a central role. Employers and employee representatives should jointly establish objective, gender-neutral criteria for pay structures. If pay reporting reveals an unjustified gender pay gap of at least 5% and the employer has not remedied the gap within six months, a joint pay assessment may become mandatory.
The Directive leaves the definition of "employee representatives" to national laws and practices. In Germany, the key question is whether, and to what extent, the works council can assume this role. The issue is complex. Under German law, the works council has limited authority on pay levels, and collective bargaining autonomy must be respected. Where collective agreements apply, trade unions could therefore potentially be considered as employee representatives.
Until there is legislative clarity, employers should approach works council engagement strategically. Consider your options carefully to avoid misunderstandings or unnecessary disputes, and develop a plan for managing this evolving area.
Germany’s delay in transposing the Directive does not shield employers from risk. On the contrary, the absence of implementing legislation increases the risk that German labor courts will interpret existing law in conformity with the Directive. Therefore, elements of the Directive may become relevant in practice through directive-conform interpretation of existing law and employers should not wait for the legislature to act.
Gather information and data, define and document objective, gender-neutral criteria for all pay components. Prepare for expanded information rights and make the required data available. Develop a clear strategy for handling potential disputes with the works council as implementation unfolds. Proactive steps now will help ensure compliance and minimize legal risk as Germany moves toward full implementation of the EU Pay Transparency Directive.