Germany
Update on the implementation of the EU Pay Transparency Directive in Germany
Impact date:
- Q1 2026: Draft amendments to the German Pay Transparency Act (EntgTranspG) expected
- June 2026: EU implementation deadline
- June 2027: First pay gap reports for employers with 250+ employees
- 2031: Reporting obligation extends to employers with 100–149 employees
On 7 November 2025, the Expert Commission submitted its final report to the Federal Minister for Gender Equality, marking the start of the legislative process.
Key recommendations from the Commission are:
Reporting Obligations:
- Mandatory pay gap reporting for companies with 100+ employees
- Reports should be based on actual remuneration, not target pay
- Digital submission in text form recommended
Right to Information:
- Employees can request pay data once per year, including average remuneration for comparable roles, broken down by gender
- Disclosure limited to gross annual and hourly pay, not detailed components
Recruitment Transparency:
- Employers must disclose salary ranges in job postings
- Asking candidates about previous salary will be prohibited
Collective Agreements:
- Employers bound by CBAs may get simplified reporting procedures
Digital Tools & Templates:
- Standardized reporting templates and digital solutions recommended to reduce bureaucracy
Employer implications/action needed Employers should now:
- Start internal pay audits and identify gender pay gaps
- Prepare to publish salary ranges in job ads
- Update HR systems for digital reporting and employee information requests
- Train HR and works councils on new compliance requirements
Employer risk Compliance and Administrative Burden
- Complex reporting obligations: Companies with 100+ employees must report gender pay gaps and justify differences based on objective, gender-neutral criteria. Failure to comply can lead to fines and reputational damage
- Digital readiness: Employers need systems to collect and process pay data, create comparison groups, and respond to employee requests. Lack of preparation could result in missed deadlines and penalties
Litigation Risk
- Equal pay claims: German courts already presume discrimination if pay differences exist between male and female employees doing equal work. The Directive will strengthen this presumption, shifting the burden of proof to employers. This could lead to a surge in lawsuits and compensation claims
Recruitment Challenges
- Employers must publish salary ranges in job postings and cannot ask candidates about previous pay. Non-compliance could result in legal sanctions and reputational harm. It also requires a cultural shift in recruitment practices
Reputational Risks
- Public reporting of pay gaps may expose companies with significant disparities, impacting employer branding and talent attraction
Operational Risks
- Works council involvement: Employers must involve works councils early to respect co-determination rights. Failure to do so can lead to legal disputes and delays
- Collective agreements: Misalignment with CBAs or incorrect grouping of employees could trigger compliance issues
Financial Risks
- Potential fines for non-compliance, costs for system upgrades, and possible back-pay obligations if pay gaps are found unjustifiable
Increase in minimum wage
Impact date: 1 January 2026 The minimum wage in Germany will increase with effect as of 1 January 2026 from currently €12.82 per hour to €13.90 per hour.
In combination with the following increase to €14.60 per hour effective from 1 January 2027 this is the largest increase since the introduction of the minimum wage in 2015, representing a rise of almost 14% over two years. The decision was made by the Minimum Wage Commission and approved by the government to strengthen purchasing power and support economic growth.
Employer implications/action needed Employers should review payroll and budget, check mini job limits, audit employment contracts and adjust pricing and cost structures.
Employer risk In combination with the increase of minimum wage there is a misclassification risk, along with back pay and penalty payments.
Increase of mini job limit
Impact date: 1 January 2026 The mini job limit will increase with effect as of 1 January 2026 from currently €556 per month to €603 per month.
Employer implications/action needed Recalculation of working hours, contractual adjustments.
Employer risk Violating minimum wage laws can result in administrative fines of up to €500,000 under the Minimum Wage Act (MiLoG), back-pay obligations (retroactively, including interest) and in severe cases (systematic underpayment), criminal charges for wage fraud may apply.
Coalition agreement
Impact date: N/A On 5 May 2025 representatives of the German parties CDU, CSU, and SPD signed the coalition agreement for the upcoming legislative period. The agreement contains several commitments which are likely to be of particular interest to employers in Germany:
- Increase in the minimum wage (the coalition partners consider a minimum wage of €15 per hour in 2026 as reasonable)
- Federal contracts above a certain value may only be awarded to companies that pay their employees in compliance with the applicable collective agreements for the respective industry
- Working Time: In line with the European Working Time Directive, the option of a weekly instead of a daily maximum working time will be created. In addition, the obligation to record working hours (electronically) will be implemented into the Working Time Act, in accordance with jurisdiction of the European Court of Justice
- The possibility of online works council meetings and online works meetings have been mentioned, as well as the option of electing the works council online
- Form requirements (in particular for fixed term contracts) will be reduced
Employer implications/action needed N/A
Employer risk N/A
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