The legal requirement for pay transparency: its effects thus far, and anticipated alterations in 2026.
Germany's Progress Towards Pay Transparency
Eight years after the introduction of the Pay Transparency Act (PayTranspG) in 2017, Germany is moving towards full compliance with the EU Pay Transparency Directive. In July 2025, an 11-member commission was formed, involving social partners, employers’ associations, and trade unions, to streamline bureaucracy and advance the practical implementation of the EU directive in Germany.
The EU directive requires German employers to publish gender pay gap data and introduce corrective actions when gaps exceed 5%, with reporting timelines phased by company size starting from 2027 for larger employers. This marks a significant shift towards increased employer transparency and cultural changes in the workplace.
The Pay Transparency Act aims to make companies more transparent about how much they pay their employees and applicants. Employers must disclose the starting salary or a salary range during the application process, and companies with at least 200 employees must regularly report on their wage structures upon request. The Act uses the median as the comparison value, and employers must actively inform their employees once a year about the criteria and rules used to determine salaries.
Despite these efforts, Germany has not yet fully embedded a comprehensive domestic Pay Transparency Act. The full scope, such as mandatory reporting, detailed pay gap disclosures, and sanctions, is still under development. Younger people are more open about their salaries compared to older ones, but show less confidence in negotiating.
The Act has faced criticism for only applying to companies with at least 200 employees and requiring at least six comparable individuals of the opposite sex. However, the former mayor of the Black Forest spa town of Todtmoos was able to achieve an important success in the fight for equal pay in court, receiving over 36,500 euros in damages and 7,000 euros in compensation.
Many employees do not use their right to information because the process is considered cumbersome or they fear conflicts. If inequalities are discovered, procedures should be started to jointly evaluate and adjust salaries. The goal of the Pay Transparency Act is to reduce wage differences between men and women and build more trust in companies.
Salary information in job advertisements is becoming increasingly important for both employers and applicants. The comparison of salaries from entirely different jobs is prevented under the Pay Transparency Act. In case of suspected wage discrimination, employers must prove that no discrimination has taken place.
The Pay Transparency Act is a significant step towards reducing wage disparities and promoting pay transparency in Germany. While the full legal framework is not yet in place, the ongoing regulatory activity indicates a commitment towards achieving a more equitable and open workplace environment.
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