Key instruments of the directive
The PTD provides for significantly stricter rules than the current German Pay Transparency Act. In addition to pay transparency in the application process, it stipulates a right to information for employees and significantly expanded reporting obligations on pay structures for all companies with at least 100 employees.
Reporting obligation: clarification of the term “remuneration”
The majority of the commission is of the opinion that effective remuneration is decisive for the reporting obligation, especially in the case of variable remuneration. The commission wants to exclude remuneration components that are not linked to work performed during the reporting period (e.g., severance payments).
Employers should be allowed to use the contractually agreed working hours as the basis for calculating gross hourly remuneration.
Important simplifications:
- Companies should be able to differentiate their reports by subsidiary.
- Company groups should be allowed to report on a consolidated basis for all companies.
- In the case of supplementary or variable remuneration components, companies should be able to decide whether to present these as a total or individually.
- The reporting obligation should not be extended to employers with fewer than 100 employees.
Privileges for employers bound by collective agreements with regard to information
Privileges for companies bound by collective agreements with regard to the right to information remained highly controversial. The majority of the commission advocates a presumption of appropriateness and a graduated right to information.
The information should be limited to the pay scale group of the person seeking information. This should also apply to companies that apply collective agreements but are not bound by them (through membership of an employers’ association).
Right to information: Clear time limit
The PTD provides for the right of employees to request information about their individual pay levels and average pay levels, broken down by gender and for groups of employees performing the equal work or work of equal value.
The vast majority of the commission wants to limit the information to once a year for the previous calendar year. The majority of the commission advocates limiting the information to the total gross remuneration.
Remedial measures and employee representation
In the event of pay differences of more than 5%, the PTD provides for a joint pay assessment together with employee representatives. The Commission does not consider it necessary to create a genuine right of co-determination for the works council. It proposes a two-stage procedure: the employer informs the employee representatives in a timely manner (e.g., within six weeks) and consults with them. If the employer is unable to take the necessary remedial measures immediately, he agrees on a specific “roadmap” with its own deadlines, depending on the complexity of the case.
Digitization as the key to reducing bureaucracy
The commission sees potential for digitization in automated and standardized evaluations to determine pay gaps, in the creation of digital portals for individual information, in automated responses to inquiries, and in the installation of early warning systems to identify pay gaps. It unanimously recommends making various digital tools available.
Conclusion
The commission was tasked with developing proposals for a 1:1 implementation of the PTD without further tightening them. The report presented contains some detailed proposals on the information and reporting obligations of employers. However, many of the proposals remained highly controversial within the commission. It remains to be seen whether this will have an impact on the implementation of the proposals.
Recommendations for companies:
- Analyze your remuneration structures at an early stage and adapt them to the new requirements if necessary
- Review your reporting processes and set up new ones if necessary
- Consider how you can digitize your HR systems
Summary of the key facts
- The EU Pay Transparency Directive must be transposed into German law by June 7, 2026.
- Effective pay and contractual working hours should determine the reporting obligation; it should be possible to consolidate the report both at group and company level.
- The privileges of collective agreements and employers bound by collective agreements remain highly controversial.
