As a general rule, EU directives do not take effect for private companies and their employees until they have been transposed into national law by the Member States. Unlike EU regulations, which apply directly across all Member States, directives are addressed to the Member States themselves and do not have direct applicability. Instead, they require national implementation measures before their provisions become part of domestic law. In this sense, directives are binding on Member States, which are obliged to transpose them into their national legal systems.

By contrast, private employers are generally not subject to the direct effect of directives. Under the settled case law of the European Court of Justice, directives do not operate horizontally and therefore cannot normally impose obligations on private parties.

For private employers, the key issue is the obligation of national courts to interpret domestic law in line with EU directives. After the transposition deadline has passed, existing legislation, including the Pay Transparency Act (EntgTranspG), must be interpreted in light of the ETRL wherever the wording of the national provisions allows for such an interpretation. Consequently, even before formal implementation, the ETRL is likely to have an increasing impact on how national legislation is interpreted and applied in practice.

Against this background, we outline below the implications that, in our view, arise from the individual rights and obligations established by the ETRL:

Articles 3 and 4 of the ETRL, concerning objective and gender-neutral pay structures and the assessment of work of equal value, are already highly relevant in practice. As these provisions pursue the same objective as §§ 3, 4(4), and 7 EntgTranspG, namely, the elimination of discrimination in pay systems, they are likely to exert an increasing influence on the interpretation and application of those national provisions in the future.

For further details on the requirements for remuneration systems, please also see our blog.

The burden-of-proof rule set out in Article 18 of the ETRL may likewise gain increasing significance. Under German law, § 22 of the General Equal Treatment Act (AGG) already provides for a facilitation of the burden of proof in discrimination cases. The Federal Labour Court has repeatedly interpreted this provision in line with European law. According to its case law, an employee may establish a presumption of pay discrimination based on sex by demonstrating that a comparable employee of the opposite sex receives higher remuneration (Federal Labour Court, judgment of 23 October 2025 – 8 AZR 300/24). Article 18 of the ETRL contains a comparable burden-of-proof mechanism. It is therefore likely that courts will increasingly interpret and apply §§ 3 and 7 EntgTranspG in light of the ETRL when adjudicating equal pay claims.

You can also find out more about the stricter burden of proof under the ETRL on our blog.

The ETRL substantially expands employees’ rights to obtain information about pay. In particular, employees are entitled to receive information on average remuneration levels for workers performing the same work or work of equal value, broken down by gender (Article 7 ETRL), as well as information on the criteria used to determine pay and pay progression (Article 6 ETRL). By contrast, the current framework under § 12 EntgTranspG contains significant limitations. The individual right to information generally applies only to employers that regularly employ more than 200 employees. In addition, the comparison group must normally consist of at least six employees. These statutory thresholds are clear and leave little room for interpretation.

For further details on the rights to information see our blog.

The reporting obligations and joint pay assessment requirements under Articles 9–11 ETRL leave far less room for interpretation. § 21 EntgTranspG sets out these obligations in clear terms and limits their application to employers with more than 500 employees. As a result, any broader application would generally require legislative implementation rather than judicial interpretation. Likewise, the concept of a joint pay assessment has no equivalent in the current EntgTranspG framework. In our view, this mechanism cannot be introduced through an interpretation of existing law in light of the ETRL, but would require an explicit statutory basis.

You can find out more about the reporting duties and joint pay assessments in our blog.

An ETRL-conforming interpretation is likely to reach its limits where German law does not currently provide for equivalent mechanisms. This applies in particular to:

In the absence of national implementing legislation, the ETRL does not automatically apply in its entirety to private-sector employers. However, once the transposition deadline has passed, the Directive may nevertheless acquire practical relevance through the EU law–consistent interpretation of existing national provisions, particularly those contained in the EntgTranspG and the established rules governing the burden of proof.

The appropriate approach for employers is therefore: do not panic but prepare on a risk-based basis. Companies should not view the ETRL as a distant regulatory development whose impact will only materialise once a national implementing act has been adopted. Rather, it is already foreseeable that courts will increasingly draw on the Directive's requirements when interpreting and applying existing legal provisions. In this context, transparent and objectively justifiable remuneration structures, coupled with robust documentation of the criteria underlying pay decisions, are becoming ever more important. Employers should therefore begin preparing for the forthcoming obligations now, if they have not done so already.

If you have any questions regarding the practical implications of the ETRL or the legal assessment of your existing remuneration systems, please feel free to contact us.