EU Pay Transparency Directive: What it means for employees and employers
The new EU Pay Transparency Directive (Directive (EU) 2023/970) aims to reduce pay gaps between men and women and promote fair pay structures. From 2026 at the latest, companies in Germany will have to be much more transparent about how salaries are calculated and how remuneration develops. Employees will have significantly greater rights to information, while employers will have to fulfill new obligations and reporting requirements.
New rights for employees
In future, employees will be able to check more easily whether they are being paid fairly. They will receive information on criteria for starting salaries, salary development and promotion processes. Applicants will also benefit: Companies must already disclose the salary range in job advertisements or at the latest during the application process. Questions about previous salary are no longer permitted. If a gender pay gap is identified, the employer bears the burden of proof - no longer the employee.
Obligations and risks for employers
Companies must revise and document their remuneration structures. From a certain company size, regular reports on the gender pay gap are mandatory. If the pay gap between men and women differs by at least five percent and this cannot be explained objectively, employers must initiate measures and carry out an assessment together with the employee representatives. For companies, this means that internal processes, criteria catalogs and salary bands must be reviewed and, if necessary, redesigned.
Opportunities for companies that act early
Transparent and comprehensible remuneration is increasingly becoming a competitive advantage on the job market. Employers who establish clear salary systems at an early stage improve their employer branding and avoid later conflicts or legal action. Companies that previously relied heavily on individual negotiations should revise their structures in order to minimize legal risks.
Conclusion: More clarity for employees - more responsibility for employers
The EU Pay Transparency Directive fundamentally changes the way salaries are handled. Employees will gain greater insight and better opportunities to enforce equal treatment. Employers must make their pay processes more transparent, auditable and legally compliant. The law firm Haas und Kollegen GmbH supports both companies in the implementation and employees in the enforcement of their claims for information or remuneration.
