The European Pay Transparency Directive
Women and men must be paid equally for equal work and work of equal value - this is stipulated by the principle of equal pay. In fact, women in Europe as well as in Germany, still earn less than men. The so-called unadjusted gender pay gap in the EU is 13 percent. In Germany, the gender pay gap remains at 18 percent. This makes Germany one of the worst performers in the EU.
There are many reasons for the pay gap. One of them is a lack of transparency of pay structures and wage-setting processes in companies. Transparency helps to eliminate unjustified pay differentials and opens up the view for the levers for more equal opportunities for women and men in companies and businesses.
To strengthen pay transparency and thus promote equal pay, the European Pay Transparency Directive came into force on June 6, 2023. It must be transposed into German law by June 7, 2026 at the latest. The EU Directive contains measures to promote pay transparency in organizations and minimum standards to improve the legal enforcement of the principle of equal pay. The aim is to ensure that those individually affected should no longer be responsible for enforcing equal pay; instead, collective instruments oblige employers to proactively address pay structures and thus promote equal pay.
The EU directive contains various measures for more pay transparency:
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Pay transparency for jobseekers
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Employers must provide information about the starting salary or its range in the job advertisement or before the interview.
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Employers are no longer allowed asking job applicants about their previous salary.
2. Right to information for employees regardless of the size of the company
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Employees will have the right to request information from their employer about their individual income and average income - broken down by gender—and for groups of employees who perform the same or equivalent work. This enables them to find out how they are paid on average compared to their colleagues.
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This right will apply to all employees, regardless of the size of the company.
3. Gender pay gap reporting for companies with 100 or more employees
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Employers with at least 100 employees must regularly publish data on the gender pay gap in their company.
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The first reporting obligation will come into force for all employers with more than 150 employees in June 2027; employers with at least 100 employees will then have to report for the first time in June 2031.
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Employers with more than 250 employees will be required to report annually. All others will have to report every three years.
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If the pay reporting reveals a gender pay gap and the company cannot justify the gap on the basis of objective gender-neutral factors, it must carry out a remedial procedure and, if necessary, a joint pay assessment in cooperation with the employee representatives.
4. Strengthening the legal enforcement of the equal pay principle, e.g.
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Claim for fulfillment in the event of a violation of the ban on wage discrimination
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Effective and dissuasive sanctions for violations of duty (in addition to damages/compensation, for the first time also fines)
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Shifting the burden of proof to employers in the event of a violation of obligations under the European Pay Transparency Directive
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Support for plaintiffs in court proceedings by qualified associations, e.g. through a legal representative action
Contact
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