EU Pay Transparency Directive: how to prepare for the new extensive reporting obligations in Germany

The EU Pay Transparency Directive 2023/970 (PTD) contains far-reaching new transparency and reporting obligations. The aim is to achieve greater transparency and fairness in corporate remuneration systems. The data will be submitted centrally to national reporting offices, which will collect and publish it. This is intended to create comparability between employers, sectors and regions.

For many companies, this means new processes, additional data work and the need for swift action. Companies with 150 or more employees must report on pay figures for 2026 for the first time by 7 June 2027.

Despite the lack of implementation in national law, HR departments should act now. From June 2026 onwards, companies must ensure that they have a clearly defined and non-discriminatory remuneration system that enables them to meet the transparency and employee information obligations under the PTD. This includes pay transparency for candidates in the recruitment process, as well as ongoing duties to inform employees about pay, pay levels and pay progression, and to provide detailed information on the pay of those performing equal work or work of equal value. In light of these upcoming transparency and reporting obligations, now is the right time for businesses to get an overview of their current position, compared against the PTD requirements and, if necessary, to adjust their remuneration system.

What are the reporting obligations under Article 9 in the PTD and the relevant deadlines, and how will it be implemented in practice?

Who needs to report and when?

• 250 or more workers: first report by 7 June 2027, then annually
• 150 to 249 workers: first report by 7 June 2027, then every three years
• 100 to 149 workers: first report by 7 June 2031, then every three years

For companies with fewer than 100 employees (“workers” in the terminology of the PTD), the PTD leaves the decision to the Member States. However, an extension of the reporting obligation to smaller companies is not currently expected in Germany, as the commission appointed by the Federal Ministry of Education, Family, Senior Citizens, Women and Youth to examine the “low-bureaucracy implementation of the Pay Transparency Directive” has spoken out against it in its final report.

Compared to the previous German Pay Transparency Act (Entgelttransparenzgesetz), which only required reporting for private employers with more than 500 employees, the new rules are significantly stricter.

Reports are to be submitted for the previous calendar year. This means that companies in scope will have to report on the calendar year 2026.

What must be reported?

According to Article 9 of the PTD, the following key figures in particular must be reported:

1. the gender pay gap;
2. the gender pay gap in complementary or variable components;
3. the median gender pay gap;
4. the median gender pay gap in complementary or variable components;
5. the proportion of female and male workers receiving complementary or variable components;
6. the proportion of female and male workers in each quartile pay band;
7. the gender pay gap between workers by categories of workers broken down by ordinary basic wage or salary and complementary or variable components.

In order to provide the required figures, all pay components must first be recorded and the key figures calculated separately for women and men. The PTD leaves open how employees with a diverse gender identity are to be included.

Publication and rights to information

The data is sent to national monitoring bodies, which are responsible for collection and publication. They make the information set out in points (a) to (f) above  – prospectively for the last four years (initially for the last year) – publicly available in an “easily accessible and user-friendly manner”. Companies can also publish this information themselves, for example on their website.

In addition, employers must provide information on the overall pay structure to all workers and workers’ representatives, including the data broken down by categories of workers as specified in point (g) above. Workers, workers’ representatives, labour inspectorates and the equality bodies may ask for further explanations. The responses must be justified. If there is a gender pay gap that is not justified on the basis of objective, gender-neutral criteria, employers shall remedy the situation within a reasonable period of time, in close cooperation with workers’ representatives and authorities.

‘Categories of workers’ and work of equal value

Reporting under point (g) on “categories of workers” who perform the same work or work of equal value is particularly challenging. Equivalence must be determined on the basis of non-discriminatory, objective and gender-neutral criteria.

According to Article 4 (4) PTD, the decisive factors are, in particular: skills, effort, responsibility and working conditions; relevant soft skills shall not be undervalued. In practice, a systematic job evaluation and a comprehensible classification of all functions in the company seems inevitable.

Sanctions

The PTD requires effective, proportionate and dissuasive penalties, including fines. In addition, authorities and courts should be able to prohibit violations and order compliance measures. The national legislator will determine which specific sanctions can be imposed and by whom.