The Ministry of Family is drafting legislation to transpose the Pay Transparency Directive (2023/970), taking into account the recommendations of a government commission established to advise on the matter. The bill will introduce new employer requirements on pay transparency and expand employer pay reporting obligations. Germany has the fifth-highest gender pay gap in the EU, with an unadjusted gender pay gap of 17.6% compared with the EU average of 12.0% (2023 Eurostat data).
The commission comprised employer, employee and academic representatives. Its final report, submitted on October 24, 2025, includes the recommendations that achieved majority support, which are listed below. These expand on the terms of the directive. The government is determining which recommendations to accept into the draft regulations, which are expected to be made public at the end of February 2026.
Categories of workers
- The grouping of employees into categories should be based on gender-neutral criteria (including skills, effort, responsibility and working conditions), but technical job evaluation is not required
- Where collective agreements are in place, employee representative engagement should not be required to determine categories of workers or the underlying criteria where these align to the agreement. Where no collective agreement is in place, employers must inform employee representatives of the process of defining job categories, but such representatives would not have any co-determination rights in the process
Employee right to request information
- The employee right to request should take effect in 2027, not June 2026 (as set out in the directive)
- The basis for the pay information provided should be actual pay for the previous calendar year. Minor non-cash benefit elements may be excluded, along with payments unrelated to work performance (e.g., severance payments). Right to request statements should also explain the basis for the categorization of workers
- A worker can only make a request once every 12 months. A time frame should be set (e.g., six weeks) for the employer to answer any requests for clarification from the worker
- While the commission said that individual data privacy rules are important in the context of the employee right to request information, it did not recommend minimum sample sizes or make other recommendations to support data privacy
Gender pay gap reporting
- The threshold for gender pay gap reporting should remain at 100 employees based on actual numbers of employees (not full-time equivalents)
- The basis for calculating pay gaps should be actual pay for the previous calendar year. Contractual working hours can be used to calculate hourly pay gaps. Pay gaps should be reported on a full-time equivalent basis
- The new law should contain a non-exhaustive list of objective reasons that can be used to explain pay differences
While the draft legislation must be published and approved, the commission’s recommendations align with the Ministry of Family’s guidance to the commission for a less bureaucratic approach to transposing the directive. For companies operating across the EU, the recommendations highlight potentially different approaches to transposition across member states; key differences exist between the German Commission’s recommendations and the draft regulations for the Netherlands and Poland, for example. Such companies will need to determine where they might want to be consistent across the EU and where they will have local variance.
In addition, the expected increase in pay transparency is likely to facilitate challenges on equal pay, especially in the context of a recent ruling of the Federal Labor Court (Bundesarbeitsgericht) in a gender-based pay discrimination case that allowed pay comparisons between the claimant and the highest paid opposite-sex colleague in a comparable position, and not limiting the pay comparison to the median pay of the comparator group.
