Failure to transpose the EU Pay Transparency Directive into German law by the deadline – what applies after 7 June 2026?

On 7 June 2026, the deadline for implementing the EU Pay Transparency Directive (Directive (EU) 2023/970, the “PTD”) into German law expired. It is now expected that the PTD will largely be implemented through a revised version of the German Pay Transparency Act (Entgelttransparenzgesetz). According to the latest communications from the Federal Ministry for Family Affairs (Bundesfamilienministerium), the Act is set to come into force in early 2027. However, some key provisions will not apply immediately, even once the Act has come into effect. The delay is being justified chiefly by the current economic situation and the potential burdens on businesses resulting from the stricter obligations attributable to the Act.

However, even a delay in implementation does not mean that employers are not subject to any obligations until a national implementing law comes into force. This is because certain PTD requirements will take effect as from 8 June 2026, even without implementing legislation. This article summarises the most important points for private-sector employers.

I. Legal situation: what will apply from 8 June 2026 in the absence of a German implementing law?

Even without an implementing law, two mechanisms will apply to private-sector employers:

1. Article 157 TFEU as directly applicable primary law

Article 157 TFEU, on which the PTD is based, is also directly applicable between private-sector employers and employees. This means that employees can already now, and irrespective of the PTD’s implementation, rely directly on their right to equal pay.

2. Courts interpreting the law in conformity with the Directive

Once the implementation period has expired, national courts will be under a heightened duty to interpret existing law in a manner consistent with the Directive. In practice, interpretation in conformity with the law will operate in much the same way as if the Directive had direct effect. As a result, from 8 June 2026 onwards, individual provisions of the PTD are likely to have de facto binding force.

The ECJ (Gerichtshof der Europäischen Union) – and subsequently the Federal Labour Court (Bundesarbeitsgericht) – has adopted a similar approach in relation to other EU legal instruments. For example, after the ECJ held that the second sentence of section 622(2) of the German Civil Code (Bürgerliches Gesetzbuch) was incompatible with EU law because it amounted to age discrimination, German courts had to stop applying that provision as from the date of the judgment in 2010. The provision was not, however, formally deleted from the Code until the end of 2018. The courts may now take a similar approach when interpreting the current version of the German Pay Transparency Act.

II. Which provisions of the PTD could in this context have practical binding effect?

The key question is whether the relevant provision of the PTD builds on existing equal treatment principles and can be incorporated into current German law by interpreting it in line with the Directive or whether it creates a new obligation that needs to be set out in detail in national legislation. The more specifically a rule is already defined in the PTD itself, the higher the risk that the courts will take it into account in their decision-making even before it has been implemented into national law.

On this basis, the following “risk categories” can be identified with regard to the binding force of individual requirements laid down in the PTD:

1. High risk of binding effect from 8 June 2026

a) Need for a transparent pay structure (Article 6 read in conjunction with Article 4(4) PTD)

The requirements for a non‑discriminatory, objectively justified pay structure are closely linked to the equal pay principle in Article 157 TFEU, which already applies under EU law. Precisely for this reason, there is a particularly high risk that from 8 June 2026 the courts will rely on the PTD’s standards when interpreting existing law.

According to the Federal Labour Court’s case law (judgment of 23 October 2025, 8 AZR 300/24), an apparently non‑transparent pay structure can, for the time being, still be rendered “transparent” by appropriate submissions in court proceedings, thereby rebutting the presumption of unjustified unequal treatment. From June 2026, this is unlikely to remain possible or at least will only be possible under significantly stricter conditions. According to settled case law of the ECJ and the Federal Labour Court, the legal consequence of a finding of unjustified unequal treatment will be an “upward adjustment” of pay.

b) Employees’ right to information (Article 7 PTD)

The right of employees to information, as enshrined in Article 7 of the PTD, is already very specific, both in terms of content (information on individual pay levels and average pay levels, broken down by gender) and in terms of the time limits for responding to a request for information (within two months). There is therefore a risk that courts may interpret and develop section 10 and following of the German Pay Transparency Act in line with the Directive and expand the existing right to information in accordance with the requirements of Article 7 of the PTD. It remains to be seen whether the thresholds currently set out in the Act (200 employees or more) will remain unchanged or whether the courts will extend the new requirements to employers below this threshold. Current indications suggest that the right to information will not apply from the entry into force of the implementing legislation, but is instead expected to apply from June 2028. Irrespective of this, a potential risk of such claims cannot be ruled out even in the absence of implementing legislation.

2. Medium risk (rule could have real-world effects though not yet in force)

a) Salary transparency towards job applicants (Article 5(1) PTD)

Under Article 5(1) of the PTD, applicants must be informed of the relevant initial pay or its range no later than “before the interview”. A breach of this obligation could, once the implementation deadline has passed, be treated by courts as an indication of discrimination under section 22 of the German General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz). Views differ on how binding this is, particularly as such pre-contractual obligations have not previously been set out in German law. In practice, the risk of courts enforcing this is likely to be fairly low. However, experience suggests that disclosing salary bands can have positive effects on the recruitment process.

b) Information regarding the right to information (Article 7(3) PTD)

Strictly speaking, once the implementation deadline has expired, employers should inform all employees individually of their right to request information. There are strong arguments indicating that courts may, at least in principle, take this obligation into account from that time onwards. However, until the Directive has been formally implemented into German law, employers may for example ‒ while accepting a degree of residual risk ‒ limit their approach to publishing a general notice on the intranet and documenting this step, rather than informing each employee individually.

3. Somewhat lower risk

a) Reporting obligations and joint pay assessments (Articles 9 and 10 PTD)

German law does not currently impose equally far-reaching obligations on employers in relation to reporting duties or joint pay assessments with the works council. As a result, it is unlikely that courts will interpret existing law in line with the Directive from June 2026.

However, this should not deter employers, especially those with more than 250 employees, from preparing for these reporting requirements now. After all, even if the PTD is implemented into national law late, it cannot be ruled out that employers may be unable to rely on the principle of legitimate expectations and the period for which initial reporting is required may be extended retrospectively. According to the Federal Ministry for Family Affairs, the law is set to come into force in early 2027, while reporting obligations are currently planned to apply from June 2028. It remains unclear which period the first reports will need to cover. The situation therefore remains ambiguous and makes planning difficult for employers.

In practice, some companies are therefore taking a pragmatic approach. They are holding off on producing formal reports for the time being, as long as no German implementing legislation requires them to do so. At the same time, however, they are preparing the necessary data and analyses internally (known as “shadow reporting”). This will allow them to respond quickly once implementing legislation comes into force and, regardless of any joint pay assessment with the works council, to identify existing pay gaps and reduce them to below 5 per cent.

b) Co-determination rights in job evaluation (Article 4(4) PTD)

Until an implementing act is passed, the risk of works councils acquiring new, directly enforceable co-determination rights in relation to job evaluation is relatively low. Article 4(4) of the PTD requires pay structures to be designed on the basis of objective, gender-neutral criteria and, where available, criteria agreed with workers’ representatives. It remains unclear whether this will result in a genuine right of co-determination for works councils or merely rights to be informed or consulted.

An early dialogue with works councils may therefore be advisable, without prematurely conceding broader legal positions. In this context, reference can be made to the fact that the PTD has not yet been implemented.

III. Recommended actions for employers

Despite some uncertainties that remain in the absence of implementing legislation, employers should take the following steps (if they have not already done so):

1. Implement the following immediately:

• Consolidate data bases: companies should check early on whether pay components, job titles, hierarchical levels, allowances and variable remuneration components are recorded consistently in their HR systems. Without reliable data, employers cannot analyse pay gaps properly or meet information and reporting obligations efficiently.
• Refine job evaluation and comparison groups: companies should review their job profiles, job families and grading systems to ensure they can clearly distinguish between equal work and work of equal value on the basis of objective, gender-neutral criteria. Without carrying out a robust job evaluation, employers cannot comply with information rights or future reporting obligations in a legally compliant manner.
• Review pay structures: companies should assess all elements of pay against objective, gender-neutral criteria and document the results comprehensively. Any existing pay differences must be objectively justifiable at all times. If there is no robust documentation available, the risk in the event of a dispute is that the decision will go in the employee’s favour, resulting in an upward pay adjustment.
• Adjust contractual confidentiality obligations: clauses that generally prohibit employees from sharing information about pay are likely to be considered invalid from 8 June 2026. Employers should remove these clauses altogether or limit them to clearly defined exceptional cases.
• Establish processes for handling information requests: where existing pay structures already allow employers to provide information in line with the PTD without difficulty and do not reveal any pay disparities requiring correction, employers should consider implementing these processes voluntarily even before national implementing legislation comes into force.
• Raise awareness among HR and managers: companies should train recruiters, HR business partners and managers from the outset on salary ranges, permissible questions during recruitment and how to document pay decisions. Even the best system is of little use if it is applied inconsistently in practice or based on outdated routines.

2. Prepare and plan:

• Establish shadow reporting: companies should prepare internal reports (shadow reporting) to identify existing pay gaps in good time and reduce them to below 5 per cent.
• Define responsibilities: companies should clarify internally which roles and individuals will be responsible for pay transparency, requests for information, documentation and reporting in future. Clear lines of responsibility will prevent friction and speed up implementation later on.
• Engage with works councils: given the unclear legal situation, companies should initiate early discussions with employee representatives to develop a shared understanding of rights and obligations during the “transitional period”.
• Prepare communications: companies should also decide at an early stage how they will communicate pay criteria and information rights to employees, applicants, managers and employee representatives. Consistent communication helps prevent misunderstandings and reduces the risk of escalation.

IV. Outlook

Even without implementing legislation, there will be no legal vacuum. From 8 June 2026, the PTD will already influence German employment law through primary EU law and the duty to interpret national law in line with the Directive.

Anyone who waits for the changes to be implemented risks failing to meet the requirements that are already in force. Action is needed now.

Would you like to know whether your pay structures comply with the Directive? We can assist you with job evaluations, shadow reporting and the design of information request processes. Please feel free to get in touch!