EU Pay Transparency Directive in Germany: What international groups must know about their German entities

Ein Beitrag auf Englisch für Konzernzentralen und HR-Teams außerhalb Deutschlands: Wie die Pay Transparency Directive (EU) 2023/970 in Deutschland ankommt — kein Umsetzungsgesetz bis heute, Fortgeltung des Entgelttransparenzgesetzes, Betriebsrat, Sechs-Personen-Regel, Datenschutz, und was die deutsche Expertenkommission empfiehlt. Mit den deutschen Fachbegriffen, die in Gesprächen mit lokalen Teams fallen.

Directive (EU) 2023/970 — the Pay Transparency Directive — applies in all member states, but every country implements it differently. Germany is a special case: the transposition deadline of 7 June 2026 has passed without a German law, and as of 27 August 2026 there is not even a draft bill. This article explains what that means for a group with German subsidiaries, which German rules apply in the meantime, and which local specifics an international HR team should expect. German terms are given in brackets, because they will come up in every conversation with the local team.

The legal situation in one paragraph

The Directive sets the reporting duties (Art. 9), the joint pay assessment (Art. 10), the right to information (Art. 7) and pre-employment transparency (Art. 5). Germany has not transposed it yet; private employers are therefore bound by the existing Pay Transparency Act of 2017 (Entgelttransparenzgesetz) until the new law arrives, expected in 2027. Public employers are bound by the Directive directly since 7 June 2026. Reporting years and deadlines are fixed by the Directive itself: the first report is due by 7 June 2027 for the calendar year 2026 — see the timeline (German). Whatever the German law finally says about forms and reporting portals, the 2026 data will be needed.

Which entity reports

Reporting duties attach to the employer, i.e. the legal entity holding the employment contracts — not the group. A German GmbH with 260 employees reports annually from 2027; a sister GmbH with 130 employees reports from 2031 every three years; a holding with 40 staff does not report at all, but the right to information and pre-employment transparency apply to it too. The German expert commission allows a group to submit its subsidiaries' reports together, as long as the figures stay separate per entity; a consolidated group-level gap is not foreseen. Details: Entgelttransparenz im Konzern (German).

German specifics an international team should know

Works council (Betriebsrat). Germany's co-determination system gives the works council a stronger role than the Directive's "workers' representatives" suggests. Introducing a pay analysis tool that processes employee data is subject to co-determination (§ 87 (1) no. 6 Works Constitution Act), the criteria for grouping jobs of equal value are subject to co-determination unless a collective agreement covers them, and the report must be presented to the works council before management confirms it. Plan for a works agreement (Betriebsvereinbarung) on the tool — what it should contain (German).

Six-person rule (Sechs-Personen-Regel). The 2017 Act only allows disclosure of a comparison salary if the comparison group contains at least six employees of the respective sex (§ 12 (3)). The expert commission recommends keeping the rule; German tools apply it to Art. 7 information requests. Expect small groups to be marked, not disclosed.

Average, not median, for information requests. The 2017 Act used the median as comparison figure; the commission recommends the Directive's average for the new right to information, with annual and hourly gross pay based on contractual hours.

Actual pay (Ist-Entgelt). The commission recommends reporting the pay actually paid in the reporting year, excluding components without a link to work performed, such as severance payments. Variable components are everything beyond the monthly base pay.

Data protection. Payroll data of German employees should be processed in Germany or the EU; a data processing agreement (Auftragsverarbeitungsvertrag) under Art. 28 GDPR is mandatory for any tool provider, and a data protection impact assessment is the prudent choice. Names are not needed for any of the metrics — employee IDs suffice. See Entgeltanalyse und Datenschutz (German).

Collective agreements (Tarifverträge). Where a collective agreement applies, the commission assumes its grading system satisfies Art. 4 (4), and co-determination on the pay system does not apply. Gaps then typically show up in allowances, bonuses and above-tariff positions rather than in base pay.

Burden of proof. Under Art. 18 (2), an employer who fails its transparency duties (Arts. 5, 6, 7, 9, 10) must prove in court that no pay discrimination occurred. Sanctions will be set by the German law; the Directive requires them to be effective, proportionate and dissuasive, including fines.

The seven metrics, in German and English

Other terms you will hear: gleichwertige Arbeit (work of equal value), Vergleichsgruppe (category of workers), Auskunftsrecht (right to information), gemeinsame Entgeltbewertung (joint pay assessment), Begründung (objective justification of a gap above 5 %), Überwachungsstelle (monitoring body — not yet designated in Germany). A full glossary is available in German.

What a group HR team should do now

1. Map German entities against the thresholds (100 / 150 / 250 employees, counted per legal entity, heads not FTE).

2. Agree one methodology for all German entities — pay definition, job evaluation criteria, treatment of part-time — so reports are comparable and works council consultations run once, not per entity.

3. Ensure 2026 payroll data are complete and exportable from the German payroll system (DATEV, SAP, Personio and others export the required fields — export guide, German).

4. Run a dry run on 2025 data in early 2027 to see which groups approach the 5 % threshold before the real report makes them official.

5. Involve the works council early and set up the Art. 7 information process; requests can arrive before the first report.

Lohngleich is a German-language tool built for exactly this: upload payroll data without names, form groups of equal value, calculate all seven metrics, produce the signed-ready report, handle information requests and justifications — with a published methodology the works council can verify, and data processed exclusively in Germany.

FAQ

Can we use our group-wide pay equity tool for the German entities?

Often for the metrics, rarely for the German specifics: the six-person rule, works-council-ready methodology documentation, German-language information letters, and EU data residency for payroll data. Check those four points before deciding.

Do we need to wait for the German law?

No. The reporting year 2026 is set by the Directive; the German law will add forms, the monitoring body and sanctions, not change the metrics. Waiting means losing the only year in which the data can still be prepared.

Is the German works council allowed to see individual salaries?

The works committee may inspect gross pay lists under § 80 (2) of the Works Constitution Act anyway. The pay report itself contains only aggregated figures; small groups are protected by the six-person rule.

Stand: 27.08.2026. Grundlage: Richtlinie (EU) 2023/970, Bericht der Expertenkommission des Bundes vom 24.10.2025, Entgelttransparenzgesetz 2017 und die im Text genannte Rechtsprechung. Kein Ersatz für Rechtsberatung im Einzelfall.