The Pay Transparency Directive – Rights to Information and Pay Gap Reporting Duties
Luca Borowski, LL.M.
Following the second post in our Equal Pay and Pay Transparency blog series, which discussed recruitment obligations and workplace transparency under the EU Pay Transparency Directive, this post turns to two further elements of the Directive that are likely to have a significant medium-term impact on human resources and pay practices: Employees’ Rights to Information and Employers’ Reporting Obligations. Employees’ Rights to Information and Employers’ Reporting Obligations.
Blog Series: Equal Pay and Pay Transparency
Pay equity is no longer merely a matter of fairness – it is becoming a statutory requirement. Under the EU Pay Transparency Directive, companies face a new set of requirements – from mandatory reporting to the implementation of transparent pay systems. In this blog series, we highlight what companies need to consider as the Directive takes shape and how to implement pay equity in a legally compliant and strategic manner.
I.
Rights to Information: Greater Pay Transparency
The Directive significantly expands employees’ rights to information (Article 7 EUPTD).
Employees have the right to obtain information on:
their individual pay level and the average pay levels
broken down by sex
for groups of colleagues performing the same work or work of equal value.
This information must be provided in writing. In line with Member State law or internal workplace procedures, employees may obtain this information via employee representatives or competent equality bodies. Employees may request further clarification if the response received is incomplete or lacks clarity. The employer must provide the requested information in writing no later than two months after receiving the application. An annual notice of the right to request pay information must be provided to employees. Employer/company size has no bearing on the right to information.
Practice Guidance:
Going forward, clauses restricting employees from disclosing pay information will have no legal effect. Compliance with the Directive will also need to be considered when drafting contracts and confidentiality provisions.
II.
Reporting Duties: Which Publications Are Required - and When?
The core of the Directive is greater pay transparency – from the first day of work through the entire course of employment. Companies with at least 100 employees will be required to provide regular pay structure reports, offering a level of detail not previously mandated. (Article 9 EUPTD).
The Directive specifies the data required in employer reports. Employers will be required to compile and disclose a broad range of statistical data, including average and median pay levels across the workforce. Employers must break down the data by base salary, as well as supplementary and variable pay components. This includes all pay on top of base salary, including bonuses, meal and commuting allowances.
Requirements differ according to company size:
Workforce size 250 and above: Annual reporting requirement takes effect on 7 June 2027
150 to 249 employees: Employers will be required to submit the relevant report once every three years, beginning 7 June 2027
100 to 149 employees: Employers will be required to submit the relevant report once every three years, beginning 7 June 2031
For companies with fewer than 100 employees, it will be up to each Member State to decide whether a reporting duty applies.
The first reports are due in 2027 and will be based on the 2026 pay levels and structures. Under current German law, the duty to report applies solely to companies with more than 500 employees (§ 21 Pay Transparency Act). The applicable threshold has been substantially reduced under the new rules.
Employers are required to provide the information to all members of staff. To meet this requirement, employers may publish the information on their website or make it accessible by other appropriate means. The data must be submitted to the national supervisory authority designated by each Member State, which is required to publish it online in an easily accessible format. The location of this new authority in Germany has yet to be determined.
III.
What Happens in Cases of Unequal Pay? – Duty to Address Unexplained Pay Gaps
One of the most practically significant and entirely new requirements in Germany is the joint pay assessment, which builds on the reporting obligations.
Employers are required to conduct the joint pay assessment in collaboration with worker’s representatives, with the aim of identifying and addressing the root causes of gender-related pay disparities.
Joint Pay Assessments are triggered if the following three conditions are met:
when the published data show an average pay gap of 5% or more between men and women performing equal work or work of equal value in the same group of workers,
where the employer cannot justify the difference in average pay levels by objective and gender-neutral criteria.
the employer has not remedied the pay gap within six months of the pay report submission date.
The date for Germany’s transposition of the Directive has yet to be set. The fact is, however: The Directive distances itself from relying on pure statistics by imposing a mandatory duty to act whenever structural inequalities are identified.
IV.
What are the implications for the future?
By introducing mandatory reporting and follow-up measures on pay disparities, the EUPTD marks a shift toward substantive regulatory enforcement. Under the new framework, employers will be required to demonstrate:
how high their “Gender Pay Gap” is,
whether systemic pay discrepancies exist in roles of equal or comparable value; and
whether these gaps are defensible based on objective, gender-neutral benchmarks, including qualification, education level, relevant experience, or individual performance.
In practice, companies must: Maintain pay system records that are clear, transparent, and verifiable. Companies with strong structures already in place not only ensure legal compliance but also gain an advantage in the competition for top talent.
