Final report on the implementation of the Pay Transparency Directive

The coalition agreement between the CDU, CSU and SPD stipulates that the EU Pay Transparency Directive (EUPTD) is to be transposed into German law with "minimal bureaucracy" by 7 June 2026. The expert commission set up for this purpose submitted its proposals to Federal Minister for Gender Equality Katrin Prien on 7 November 2025. Based on this recommendation, the responsible department of the German Federal Ministry of Education, Family, Seniors, Women and Youth (Bundesministerium für Bildung, Familie, Senioren, Frauen und Jugend, BMFSFJ) is now responsible for drafting a bill for the "Pay Transparency Act 2.0". The legislative process is scheduled to start in early 2026.

We have outlined the recommendations made by the expert commission below:

Recommendations on reporting requirements

Most of the commission members recommend using the actual remuneration paid ("actual remuneration") as the basis for the reporting requirements. In a group of companies, the parent company should generally be able to bundle the reports of the individual companies and report on behalf of the respective companies. However, it remains to be seen whether individual indicators can also be summarised on a group-wide basis.

Variable remuneration components can be reported as a sum or grouped (into meaningful groups), whereby low-value benefits in kind and benefits not granted by the contractual employer (e.g. stock options, phantom stocks, etc.) as well as severance payments can be excluded from the remuneration that is subject to the reporting requirements.

Furthermore, terms such as median and average should be clearly defined by law. Differences in remuneration should be documented on the basis of full-time equivalents.

As regards the burden of proof, the expert commission recommends that pay transparency reports showing a pay gap of less than 5% should be sufficient to refute the presumption of gender-specific pay discrimination. The inclusion of a relative "threshold" is welcome, particularly in light of the recent decision of the Federal Labour Court (Bundesarbeitsgericht, BAG) of 23 October 2025 (8 AZR 300/24). According to this decision, the mere fact that (just) one comparable colleague of the opposite sex receives higher remuneration can give rise to a presumption of gender-based discrimination – keywords: "pair comparison" and departure from the "comparison group".

Reports should be possible in text form and harmonised with other existing reporting requirements (e.g. CSRD).

Recommendations on remedial procedures and pay assessment

Two-stage remedial procedure: Employers should be required by law to inform and consult with employee representatives in a timely manner (e.g. within six weeks). If the necessary remedial measures cannot be taken immediately, they should be able to agree on a specific "roadmap" with their own deadlines, depending on the complexity of the necessary steps.

Most of the commission members are of the opinion that the works’ representation (works council, general/group works council, staff council, the representative body for executive staff, church employee representative body) is responsible; however, there is no obligation to create new employee representatives in companies without a works council. In contrast hereto, trade unions should be able to participate on a voluntary basis. The remaining commission members argue that, given the normative applicability of the collective agreement due to the commitment to collective bargaining coverage, the trade union is the appropriate point of contact. Against this background, a request is being made to the legislator to precisely stipulate the responsible parties.

The law should contain a catalogue of objective, gender-neutral justifications. These include:

• agreements on the preservation of acquired rights,
• job-related criteria for job applicants,
• in other respects, personal or person-related criteria such as local differences and market conditions.

Recommendations on the right to information

The right to information should be enforceable for the first time from 2027.

The information should comprehensibly explain how groups are formed. Hypothetical comparators or former employees should not be included in the formation of comparison groups. The information should be limited to the total gross remuneration (sum of all remuneration) for the previous year; a breakdown into individual components is not necessary.

The right to information should only apply once a year and only arise again after at least one year following the last disclosure. Standardised forms should be provided.

Data protection: The minimum size of the comparison group for the protection of personal data should be retained in accordance with the previous Pay Transparency Act (cf. Section 12 (3) sentence 1). Alternatively, the importance of the data protection should be clarified.

Privileges for companies bound by collective agreements

A key factor is that collective agreements should continue to be subject to a "presumption of appropriateness". This means that employers should be able to form comparison groups based on collective agreement pay groups; a correction should only be necessary if the person requesting information proves that the group formation according to the collective agreement does not comply with Art. 4 (4) EUPTD. Companies bound by collective agreements should be granted extended deadlines for providing information and for remedial measures.

The parties to collective agreements should be able to independently review and document collective agreements as to their non-discriminatory nature.

Legal and practical challenges

May we highlight the following aspects:

• Implementation that does not comply with EU law entails considerable risks (legal action, infringement proceedings).
• The review of all existing collective agreements as to their EUPTD compliance would overstretch the resources of the parties to the collective agreements.
• The EUPTD has been criticised for being bureaucratic; implementation should minimise the burden on companies, especially SMEs.
• The existing co-determination rights of works councils are considered sufficient and are not going to be extended.

Conclusion and outlook

The commission has succeeded in identifying the key practical issues of particular relevance for the implementation of the EUPTD. However, it is clear that the commission was unable to agree on a uniform recommendation on fundamental issues. These include the competence of employee representatives in remedial and joint pay assessments and the so-called "group privilege" in reporting. However, in terms of content, an initial direction is discernible.

We will have to wait until January 2026 to see which recommendations the BMFSFJ will actually incorporate into the draft bill. It will also be interesting to see whether the BMFSFJ will submit proposals of its own.

Companies should use the remaining, dwindling time in their own interests to specifically prepare for the increasingly concrete implementation of the EUPTD. It is important to identify and mitigate potential risks at an early stage.

Click here for the final report of the commission on the "Low-bureaucracy implementation of the Pay Transparency Directive".

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