The German Pay Transparency Act (Entgelttransparenzgesetz, EntgTranspG) has required employers since 2017 to ensure equal pay for women and men performing equal or equivalent work. Employees in companies with more than 200 staff have the right to request information about comparative salaries. From June 2026, the EU Pay Transparency Directive will significantly tighten these obligations – reporting requirements will then apply from just 100 employees.
Definition: What is the Pay Transparency Act?
The Pay Transparency Act – officially the "Act to Promote Transparency of Pay Structures" (Gesetz zur Förderung der Transparenz von Entgeltstrukturen) – has been in force since 6 July 2017. It supplements the General Equal Treatment Act (AGG) and explicitly prohibits direct or indirect discrimination based on gender with regard to all pay components (Section 3, Paragraph 1 EntgTranspG).
The central principle is: equal pay for equal or equivalent work. Employers may not agree to or pay a lower salary based on gender than they would for employees of the other gender (Section 7 EntgTranspG). To achieve this goal, the law introduces three instruments: the individual right to information, company audit procedures, and reporting obligations.
Objectives and Background
Gender Pay Gap in Germany – Current Figures
The gender pay gap refers to the difference in average gross hourly earnings between women and men. According to the Federal Statistical Office (Statistisches Bundesamt), the unadjusted gender pay gap in 2024 was 16 percent – women earned an average of €4.10 less per hour than men. This represented the strongest decline since calculations began in 2006.
The adjusted gender pay gap, which factors out differences in profession, qualifications, and working hours, remained unchanged at 6 percent in 2024. This means that even for comparable work, women earn less on average. Germany is significantly above the EU average of approximately 12 percent.
Origin and Effectiveness of the Law
The Pay Transparency Act was intended to help close this wage gap through greater transparency. However, the Federal Government's second evaluation report from 2023 shows that the instruments are used reluctantly. Only about 4 percent of employees in affected companies have exercised their right to information. Just under 30 percent of companies have reviewed their pay structures since 2019.
The Three Instruments of the EntgTranspG
Individual Right to Information (Sections 10 ff. EntgTranspG)
Employees in companies with more than 200 staff can request information about the comparative pay of the other gender. The comparative pay is the statistical median of the gross salaries of employees performing equal or equivalent work.
The request must be made in text form. In companies bound by collective agreements, the information request is directed to the works council; in companies not bound by collective agreements, it goes to the employer. Important: The right can only be exercised every two years. Additionally, at least six employees of the other gender must perform the comparative work to protect data privacy.
Company Audit Procedures (Sections 17 ff. EntgTranspG)
Private employers with more than 500 employees are encouraged to regularly review their pay regulations and various pay components for compliance with the equal pay requirement. This audit is voluntary but recommended. It is conducted under the employer's own responsibility with the participation of the works council.
Reporting Obligation on Pay Equality (Sections 21 f. EntgTranspG)
Companies with more than 500 employees that are required to prepare a management report under the German Commercial Code (HGB) must regularly report on the status of equality and pay equity. The cycle is every five years for companies bound by collective agreements and every three years for those not bound by collective agreements.
Threshold Overview
The obligations under the Pay Transparency Act are graduated according to company size:
The decisive factor is the number of employees in the individual establishment, not in the overall company. For example, if a group has five establishments with 150 employees each, there is currently no right to information – even though the company has 750 employees in total.
EU Pay Transparency Directive 2026: What Will Change?
The EU Pay Transparency Directive 2023/970 must be transposed into German law by 7 June 2026. It brings far-reaching changes that will significantly tighten the existing Pay Transparency Act.
Salary Transparency in the Recruitment Process
In future, employers must inform applicants about the starting salary or salary range before concluding a contract – ideally already in the job advertisement. There will also be a prohibition on asking: applicants may no longer be asked about their current or previous salary. This regulation is intended to prevent existing pay inequalities from being perpetuated.
Extended Information and Reporting Obligations
From 2026, the reporting obligation will apply to companies with 100 or more employees. Employees must also be reminded annually of their right to information. Reports must be more detailed in future and include, among other things, the gender pay gap by pay category and the proportion of women and men per salary group.
Reversal of Burden of Proof and Sanctions
A key innovation: if individual salary is below the comparative pay, discrimination will be presumed in future. The employer must then prove that there are objective reasons for the difference (reversal of burden of proof). Violations may result in compensation claims and sanctions. The Federal Labour Court (Bundesarbeitsgericht) had already set this direction with a landmark ruling in 2021.
Practical Implementation for HR
To be prepared for the tightened requirements from 2026, HR managers should act now:
Analyse pay structures: Measure the gender pay gap in your company. Identify where differences exist and whether they are objectively justified.
Conduct job evaluation: Clearly define which activities count as equal or equivalent. Document the criteria transparently.
Develop salary bands: Create transparent, comprehensible salary structures with defined ranges for each position.
Adapt recruiting: Set salary ranges for job advertisements. Train recruiters not to ask about current salary.
Establish processes: Set up processes for handling information requests. Plan for annual reporting.
Train managers: Raise awareness of the topic of pay equality. Unconscious bias can also play a role in salary decisions.
Frequently Asked Questions About the Pay Transparency Act
What does the Pay Transparency Act regulate?
The EntgTranspG requires employers to ensure equal pay for women and men for equal or equivalent work. It introduces three instruments: the individual right to information, company audit procedures, and reporting obligations. The law has been in force since 6 July 2017 and aims to reduce the gender pay gap through transparency.
From how many employees does the Pay Transparency Act apply?
The individual right to information exists in establishments with more than 200 employees (Section 12 EntgTranspG). The reporting obligation applies to companies with more than 500 employees that are required to prepare HGB management reports. From June 2026, the threshold for reporting obligations will drop to 100 employees. The establishment size is always decisive, not the company size.
How does the right to information work?
Employees can request information about the comparative pay of the other gender in text form. In companies bound by collective agreements, the request goes to the works council; otherwise, to the employer. The information includes the median of gross salaries of comparable employees. The right can be exercised every two years. At least six employees of the other gender must perform the comparative work.
What changes will the EU Pay Transparency Directive bring in 2026?
The directive brings extensive innovations: employers must state salary ranges in job advertisements and may not ask applicants about their current salary. The reporting obligation will apply from 100 employees. If there are differences from the comparative pay, discrimination is presumed – the employer must demonstrate objective reasons. Germany must implement the directive by 7 June 2026.
What is the current gender pay gap in Germany?
According to the Federal Statistical Office, the unadjusted gender pay gap in 2024 was 16 percent. Women earned an average of €4.10 less per hour than men. The adjusted gender pay gap, which considers comparable activities, was 6 percent. There are clear differences in the East-West comparison: in the East, the gap is 5 percent; in the West, 17 percent.
What happens if the Pay Transparency Act is violated?
In cases of proven pay discrimination, employees are entitled to equal pay plus back payment. The current law does not provide for direct fines. However, the Federal Labour Court has ruled that if individual salary is below the comparative pay, discrimination is presumed – the employer must demonstrate objective reasons. From 2026, the EU directive explicitly provides for sanctions and compensation claims.
What reporting obligations do employers have?
Currently, only companies with more than 500 employees that are required to prepare HGB management reports are obliged to report. The report covers equality measures and the status of pay equity. The cycle is every five years (collectively bound) or three years (not collectively bound). From 2026, the obligation will apply from 100 employees with annual reports that must show the gender pay gap by category.
How can I prepare my company for 2026?
First, analyse existing pay structures and identify any wage gaps. Conduct a job evaluation to define equal and equivalent activities. Develop transparent salary bands and adapt recruiting – with salary information in job advertisements. Establish processes for information requests and reporting. Train managers on the topic of diversity and equal opportunities.
Conclusion
The Pay Transparency Act is an important building block for greater pay equity between women and men. With the EU Pay Transparency Directive, requirements will be significantly tightened from June 2026: lower thresholds, salary transparency in the application process, and reversal of burden of proof in cases of suspected discrimination. HR managers should analyse their pay structures now and establish processes to be compliant.
Pay inequality often begins at the hiring stage – through unconscious bias in personnel selection. Those who want to avoid pay discrimination in the long term should rely on objective, fair selection processes from the recruitment stage. The digital platform Aivy supports this with scientifically validated assessments that reduce unconscious bias and enable fair personnel selection.
Legal notice: This article is for general information purposes only and does not constitute individual legal advice. For specific legal questions, please consult a lawyer specialising in employment law.
Sources
- Entgelttransparenzgesetz (EntgTranspG). Federal Republic of Germany, 2017.
https://www.gesetze-im-internet.de/entgtranspg/ - EU Pay Transparency Directive 2023/970. European Parliament and Council, 2023.
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32023L0970 - Information on the Pay Transparency Act. Federal Ministry for Family Affairs, Senior Citizens, Women and Youth (BMFSFJ), 2024.
https://www.bmfsfj.de/bmfsfj/themen/gleichstellung/frauen-und-arbeitswelt/lohngerechtigkeit/entgelttransparenzgesetz - Gender Pay Gap falls to 16% in 2024. Federal Statistical Office (Destatis), February 2025.
https://www.destatis.de/DE/Presse/Pressemitteilungen/2025/02/PD25_056_621.html - Second Evaluation Report on the Pay Transparency Act. Federal Government, 2023.
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