Deadline for implementing the Pay Transparency Directive has passed – what companies need to bear in mind now
The Federal Republic of Germany had until 7 June 2026 to transpose the provisions of the Pay Transparency Directive (Directive 2023/970) into national law. The transposition deadline passed without the Federal Ministry of Education, Family Affairs, Senior Citizens, Women and Youth – the ministry responsible for transposition – having drawn up a draft bill. Following the submission of a final report at the end of 2025 on the implementation of the Pay Transparency Directive with a minimum of administrative and bureaucratic burden, an amendment to the existing Pay Transparency Act is now expected in early 2027.
Due to the failure to implement the directive within the deadline, a period of considerable legal uncertainty has begun for employers, which we advise them to use to prepare thoroughly for the requirements of the Pay Transparency Directive.
Why companies need to adapt to the requirements of the Pay Transparency Directive
As the Directive is sufficiently specific in its content, the Pay Transparency Directive already has direct effect on the State and state-controlled employers, meaning that public employers (ministries and public authorities, regional administrations, local authorities and municipalities, as well as other state institutions) must already comply with the obligations arising from the Pay Transparency Directive. Employees working for public-sector employers therefore have, amongst other things, the right to request comprehensive information regarding their own pay or the average pay of comparable employees. Public-sector employers are now required, at the very latest, to review their pay structures for potential pay disparities and to ensure that their recruitment processes are transparent, non-discriminatory and, in all other respects, in line with the Pay Transparency Directive.
Until the Pay Transparency Directive is transposed into national law, however, the Directive does not, in principle, apply to private employers. Nevertheless, the Directive is not without consequences for these private employers either. This is because the courts are obliged to interpret national laws in a manner consistent with the Directive. In any case, recent years have led to a fairly fundamental shift in case law, right up to the Federal Labour Court, when it comes to the assessment and legal consequences of pay differences between women and men. In the coming months, it is to be expected that case law will align (even more closely) with the principles of the Pay Transparency Directive. What this means exactly will become clear from judicial practice – but the legal position of employees has already been strengthened, even without an implementing law.
What obligations do companies face?
The minimum requirements set out in the Pay Transparency Directive are clearly foreseeable:
- transparency in the recruitment process (disclosure of starting salaries or salary ranges, a ban on asking about previous salaries),
- extended rights to information,
- regular reporting obligations,
- easier enforcement of employees’ claims for damages (reversal of the burden of proof in cases of indirect discrimination).
At the very least on a practical level, therefore, the EU Directive is now – despite the expiry of the transposition deadline for national legislators – taking on significant weight and reinforcing the process of shifting the legal landscape that has already begun. We have already summarised elsewhere that the Directive represents a significant paradigm shift. The only way this could change is if the EU were to revise its directive. Whilst this seems conceivable in view of the low implementation rate to date (apparently only four Member States have fully implemented the directive so far) and the experience with the Supply Chain Due Diligence Act, it is anything but certain.
Regardless of the legal situation, and despite the labour market having eased somewhat in some respects from an employer’s perspective, the pressure on employers to remunerate staff transparently and with a view to equal pay is likely to increase further. This is because pay transparency is not merely a compliance issue; rather, it offers companies opportunities to position themselves as modern employers in the labour market. Every employer is advised to view the period leading up to the transposition of the Pay Transparency Directive into national law as an opportunity to review their practices and, where necessary, readjust their remuneration system in light of the Directive. Above all, this means critically scrutinising their own remuneration practices, identifying objective and directive-compliant distinguishing factors, and establishing or refining structures for handling requests for information, for transparent and non-discriminatory recruitment procedures, and for future reporting.