In brief: The EU Pay Transparency Directive enters into force on 6 June 2023 and must be transposed into German law by 7 June 2026. It introduces extensive transparency and reporting obligations for employers and affects more companies than the previous German pay equality law.
The EU Pay Transparency Directive introduces comprehensive new obligations for employers. We explain the key aspects and provide guidance on implementation for companies in Germany.
The Pay Transparency Directive (Directive (EU) 2023/970) entered into force on 6 June 2023. The main objective is to strengthen the principle of equal pay for equal or equivalent work and systematically reduce gender-related wage gaps. The German legislator is obliged to transpose the requirements into national law by no later than 7 June 2026.
The Pay Transparency Act (EntgTranspG), which has been in force in Germany since 30 June 2017, is now to be comprehensively reformed. However, the future requirements go far beyond the previous legal situation. They affect not only internal salary structuring but also recruitment processes, documentation obligations, governance structures and potential liability risks.
The scope of the directive is significantly broader than that of the previous German law: while the EntgTranspG previously applied only to employers with more than 200 employees, the EU directive covers considerably more companies.
The core objectives of the directive are the identification and reduction of the gender pay gap, the creation of transparency in compensation systems, the expansion of employee rights to information access, the introduction of binding reporting and control mechanisms, and stronger enforcement mechanisms. The directive applies equally to employers in the private and public sectors.
Source: www.activemind.legal