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 includes, among other things, the following measures to promote pay transparency:
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The employer's obligation to be transparent before employment by informing job applicants about the starting salary or its range in job advertisements or in good time before the job interview,
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The extension of the individual right to information to all employees of private and public employers, enabling them to find out how they are compensated, on average, compared to their female and male colleagues who perform the same or equivalent work,
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The requirement for private and public employers with more than 100 employees to prepare pay transparency reports on the pay gap between men and women, as well as the requirement to implement corrective measures if the report reveals unjustified pay gaps among groups of employees—men and women—who perform the same or equivalent work.
The EU directive also includes measures to strengthen enforcement:
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A minimum statute of limitations of three years and
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Penalties for violations of obligations under the ETRL.
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