Bye-bye gender pay gap? What does the new pay transparency directive mean, and will everyone have to earn the same in the future?

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With its Pay Transparency Directive, the European Union has a clear goal in mind: to eliminate the gender pay gap. Even though Germany already has a Pay Transparency Act, practice shows that the existing regulations are not sufficient to close the gender pay gap. This is where the EU comes in, aiming to eliminate gender-specific pay discrimination through greater transparency on the subject of salaries—even as early as the application process. In the future, employers will be required to provide information about the starting salary or salary range during the application process and will no longer be allowed to inquire about the applicant's previous salary.

Another key component of the directive is the right to information, which is intended to provide information about the average remuneration of comparable employees and should exist regardless of the size of the company.

The directive not only expands the rights of employees, it also makes it easier for them to enforce those rights: if employees can substantiate facts that suggest discrimination, the burden of proof in court proceedings will shift to the employer. Employers may have to pay damages or compensation under certain circumstances.

For companies, the directive will not only mean increased bureaucratic effort, but also potentially high costs. They should check at an early stage whether a differentiated remuneration system is already in place and whether pay differences for the same or equivalent work are justified on the basis of objective, gender-neutral criteria.

 

The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.