Pay

Pay transparency: what employers need to prepare now.

Germany should have transposed the EU Pay Transparency Directive by 7 June 2026. There is still no law. For employers, that is no reason to wait: what the directive requires cannot be put in place within a few weeks.

Where things stand

Directive (EU) 2023/970 has been in force since June 2023. Member states had until 7 June 2026 to transpose it into national law. Germany let that deadline pass. As of early October 2026, there is no draft bill. In July 2026, the federal government stated that it would begin the legislative process once certain questions had been resolved.

Until then, the German Remuneration Transparency Act (Entgelttransparenzgesetz) applies in its 2017 version, with a right to information in establishments with more than 200 employees. Yet the expired deadline is not without consequence: labour courts are required to interpret existing law as far as possible in line with the directive. The principle of equal pay for equal work or work of equal value applies directly in any case.

What is coming

The directive sets the framework that the German law must fill in. The key points:

• Applicants learn the starting salary or the pay range of a position before the job interview.
• Asking about previous salary is no longer permitted in the application process.
• All employees gain a right to information about their own pay and the average pay of comparable colleagues, regardless of company size.
• Companies with 250 or more employees report annually on the gender pay gap, those with 150 or more every three years, and those with 100 or more also every three years, for the first time in 2031.
• If the gap within a group is 5 per cent or more and cannot be objectively justified, a joint pay assessment with employee representatives follows.
• In the event of a dispute, the employer must prove that there has been no discrimination.

Whether the German legislature adopts the directive’s deadlines or postpones them remains open. The substance will change little.

What matters: evaluating the position

The real effort lies not in the report, but in what precedes it. The directive requires that pay can be justified by objective criteria. It names four: skills, effort, responsibility and working conditions. Employers who pay differently for work of equal value need comprehensible reasons for doing so.

In many owner-managed companies, salaries have grown over the years, often negotiated one to one. There is nothing reprehensible about that. But it will need explaining as soon as employees request information or applicants know the range in advance.

Transparency does not begin with the figure, but with the question of what a position actually demands.

What you can prepare now

Five steps that make sense regardless of when the law arrives:

• Describe positions: tasks, responsibilities and requirements in a consistent format.
• Evaluate positions: by skills, effort, responsibility and working conditions, and group them into categories of work of equal value.
• Set salary bands: a justifiable range for each group.
• Adapt the application process: state the range early, and ask about salary expectations rather than previous salary.
• Document deviations: if you pay outside the band, record the reason in writing.

What this means for an appointment

In the search for specialists and executives, it is above all the beginning that changes. Pay is no longer negotiated at the end of a process; the framework is set from the outset. This creates clarity for both sides and avoids conversations that founder on mistaken expectations.

That is why, at the start of every search, we agree with our clients not only the requirements profile but also the pay range for the position, and put both in writing. Anyone who does this work thoroughly once has already completed a substantial part of the groundwork for pay transparency.

This article reflects the position as of early October 2026. It does not constitute legal advice.