Germany – Pay transparency and pay equity law and reporting

Since 2017, Germany’s Entgelttransparenzgesetz, or Transparency in Wage Structures Act, has required employers of a certain size to take action on pay equity and transparency.

Existing pay equity legislation in Germany 

Germany’s current pay transparency legislation dates from 2017. The stated purpose of the Transparency in Wage Structures Act (Entgelttransparenzgesetz) is “to enforce the right to equal pay for women and men for equal work or work of equal value.” Compared to some other EU nations, the requirements are relatively light. This means that the existing laws will change substantially as the country transposes the EU Pay Transparency Directive into national law.

What the act prohibits

When determining pay, employers cannot discriminate, directly or indirectly, against employees based on their gender.

What the act requires

Employers of a certain size are subject to reporting requirements. The reports must include both the workforce demographics and information on the work the organization is doing to move towards equality and equal pay. This reporting began in 2022. (We’ll talk about the reporting requirements in more depth below.)

There is also a pay transparency measure that applies to all organizations with over 200 employees. If an employee requests it, the employer must provide information on pay structures, including the salaries of other employees in similar roles and the criteria used to determine pay, to the employee within three months.

Also covered under current law

Though not a requirement per se, the act encourages organizations with over 500 employees to conduct internal evaluations to see whether they are promoting equal pay. This involves analyzing the pay structure and identifying the processes for reporting on and eliminating pay gaps.

Another noteworthy aspect of German law is that if a female employee is found to be paid less than a male counterpart doing similar work, there is a legal presumption that discrimination is taking place. The burden of proof rests on the employer. (See the PayAnalytics team’s coffee talk about one landmark pay equity case in Germany.) This approach prefigures the EU Pay Transparency Directive, which will shift the burden of proof onto the employer in all EU member states.

Pay gap reporting requirements

The German commercial code requires many companies to file an annual management report. The nation has aligned its pay transparency laws with the commercial code, so organizations that a) have over 500 employees and b) are required to file a management report must also file a report on gender equality and equal pay.

The report must contain the following:

1️⃣ A description of the organization’s “measures to promote equality between women and men and the impact of the former” and also “their measures to create equal pay for women and men.” Examples might include providing childcare or running management training programs to help more women move up within the organization. If the organization is not taking such measures, the report must explain why.

2️⃣ Pay statistics, disaggregated by gender, on:

a) All employees (average total number)

b) The average number of full-time and part-time employees

3️⃣ After a company files its first pay transparency report, subsequent reports must also compare current reporting period data to the last reporting period’s data.

Reporting deadlines and channels

If an employer has over 500 employees, is required to fill out a management report, and is under a collective bargaining agreement, it must report every five years. If it has over 500 employees, is required to fill out a management report, and is not under a collective bargaining agreement, it must report every three years.

Reporting deadline dates follow those of the organization’s management report, as required under the Commercial Code. These reports are usually due within three months of the organization’s fiscal year end.

The reports required under the Entgelttransparenzgesetz are submitted as attachments to the management report. Results are published in the German Federal Gazette, which is the government’s official promulgation platform. Germany does not currently assess penalties for noncompliance.

Germany’s adoption of the EU Pay Transparency Directive

EU member states have until 2026 to transpose the EU Pay Transparency Directive into national law. In Germany, this will mean substantial changes to the existing legislation. For one thing, reporting requirements will be expanded to far more organizations. While Germany currently requires employers with 500 or more employees to report their data, the Directive will require employers with 100 or more employees to also begin reporting by 2031. In addition, reporting will be more frequent, and it will require more in-depth pay equity analysis (i.e., multiple calculations of the pay gap, a detailed breakdown by job category, and written justification for any pay gaps over a certain size).

German government officials initially announced that the nation planned to transpose the EU Directive by the end of the 2024 legislative session. That deadline was not met, but draft legislation is said to be forthcoming in 2025. Pay equity experts speculate that reporting will not be required until 2027.

For more on the Directive and its requirements, download our
free eGuide and readiness checklist. We’re also keeping track of EU Directive transposition nation-by-nation on this page.

Further support with PayAnalytics by beqom

With the EU Directive on the horizon, it’s important for employers in Germany to start getting ready. This means evaluating and adapting their pay transparency and pay equity efforts, identifying any pay gaps, and putting all the pieces in place for the required reporting. Having the right analytics software to measure pay equity can greatly simplify the process of compliance. PayAnalytics by beqom is purpose-built to address pay transparency requirements, with:

Pay equity analysis: Our software solution spots the demographic pay gaps affecting your workforce and gives recommendations for closing those gaps with cost-efficient targeted raises. This gives you the starting point you need to create a meaningful action plan.

Reporting: A suite of ready-made reports makes reporting under the Entgelttransparenzgesetz easy—just a few clicks and your documents are ready to submit.

Job evaluation: One key to creating a fair pay structure is ensuring equal pay for equivalent work. The job evaluation tool lets you compare employees’ pay across jobs that may look quite different or require different skillsets.

Compensation assistant: After you’ve put in the diligent work to close your organization’s pay gaps, it’s important to make sure the gaps never reappear. Our compensation assistant tool provides ongoing assistance with pay and promotion decisions, ensuring that your organization can continue to deliver on its pay equity promises.