The EU Pay Transparency Directive following the expiry of the transposition deadline: What already applies in Germany – even without a German implementation law?

The deadline for implementing the EU Pay Transparency Directive (Directive (EU) 2023/970) into national law expired on 7 June 2026. Germany has missed this deadline, and no draft bill has yet been presented. Many companies conclude from this that the current legal situation will remain unchanged until an implementing law comes into force. This assumption falls short:

The Pay Transparency Directive does not only take effect once Germany has implemented it. Despite Germany’s failure to transpose the Directive, public-sector employers have been directly bound by its key provisions since 8 June 2026. For private-sector employers, the Directive takes effect via Article 157 TFEU. This means that the courts are obliged to interpret labour law in accordance with the Directive.

Background: The aim and scope of the Pay Transparency Directive

The Pay Transparency Directive is intended to reduce the pay gap between women and men. In Germany, the unadjusted gender pay gap stood at 16 per cent in 2024. 

The Pay Transparency Directive applies to all categories of employees, including those not covered by collective agreements. In terms of rights to information, information obligations, reporting obligations and joint pay assessment, it goes significantly beyond the previous provisions of the Pay Transparency Act (EntgTranspG).

Immediate implications for public-sector employers

For public sector employers, the legal situation is comparatively clear. The European Court of Justice (ECJ) has consistently held that, once the transposition period has expired, employees can derive rights directly from sufficiently specific provisions of the Directive in relation to public sector employers. From 8 June 2026, public sector employers must comply directly with the requirements of the Directive. This applies to pay transparency in recruitment as well as to rights to information, reporting obligations and rules on the burden of proof.

Interpretation in line with the Directive: implications for private employers too

The Pay Transparency Directive does not apply directly to private employers. However, once the transposition period has expired, national courts must interpret all domestic law in the light of the Directive’s objectives. This applies in particular to the Remuneration Transparency Act (EntgTranspG), the General Equal Treatment Act (AGG), the Civil Code (BGB), the Works Constitution Act (BetrVG) and the Collective Agreements Act (TVG). 

A comparable example of the scope of interpretation in accordance with the Directive is the Federal Labour Court (BAG) judgement of 13 September 2022 (1 ABR 22/21) on the recording of working hours. In this decision, the BAG derived an obligation to record the start and end of the daily working time for all employees from Section 3(2)(1) of the ArbSchG through an interpretation in accordance with the Directive, in the light of the EU Framework Directive on Health and Safety at Work.

In practice, this interpretation in accordance with the Directive primarily concerns four points, in which the Pay Transparency Directive is likely to be taken into account:

1. Requirements for pay systems:

   Article 4 of the Pay Transparency Directive requires that pay structures be based on objective and gender-neutral criteria. These criteria include, in particular, skills, responsibilities, workload and working conditions. These provisions give concrete form to the existing principle of equality set out in Article 157 TFEU. For the labour courts, these requirements provide a direct point of reference when interpreting Sections 3 and 4 of the Pay Transparency Act (EntgTranspG) and the equal treatment provisions of the General Equal Treatment Act (AGG).

   Consequently, remuneration models are coming under pressure where pay levels are determined primarily by individual bargaining power, salary history or case-by-case decisions that are not transparently documented. As the case law of the Federal Labour Court (BAG) (judgement of 23 October 2025 – 8 AZR 300/24) shows, in the case of a remuneration system deemed to lack transparency, the presumption of unjustified unequal treatment can no longer be rebutted retrospectively. According to the established case law of the ECJ and the Federal Labour Court (BAG), the legal consequence of unjustified unequal treatment is then ‘upward alignment’.

2. Burden of proof and equal pay claims: 

   Section 22 of the General Equal Treatment Act (AGG) already contains a provision on the reversal of the burden of proof, which the Pay Transparency Directive further reinforces. Consequen