The EU member states must have incorporated the EU Pay Transparency Directive (ETRL) into national law by June 7th. That’s the plan. But many countries did not meet this deadline – including Germany. “The implementation of the EU Pay Transparency Directive into national law will take place during this legislative period,” was recently stated in response to a request from our editorial team from the Federal Ministry of Education, Family, Senior Citizens, Women and Youth. The ministry also confirmed to other media that the deadline would not be met.
Infringement proceedings: What threatens Germany if the deadline is missed?
Since the ETRL was not written into national law in this country in a timely manner, the European Commission can sue Germany for violating EU law. The aim of such an infringement procedure is to ensure that member states actually comply with EU law and incorporate it into local regulations.
The procedure is divided into an out-of-court preliminary procedure and a possible procedure before the European Court of Justice (ECJ):
- In the first step, the EU Commission sends a letter of formal notice to the member state. In it, she asks him to provide a statement within two months. If the member state does not respond or does not respond satisfactorily and does not implement the directive within this deadline, the EU Commission will, in a second step, send a formal request to comply with EU law – coupled with a further deadline.
- If the violation is not remedied within this period, the Commission can bring an action before the European Court of Justice. If the ECJ then finds a breach of contract, the state must end the illegal situation. If the rules are not followed, the court can impose sanctions in a second procedure, such as lump sum payments or daily fines. The state must pay this until it has fulfilled its obligations. The ECJ has leeway when determining the amount of the penalty: it can, for example, take the extent of the delay as a basis or take into account the importance of the provisions violated or the extent to which the public welfare or the interests of individuals are affected by the violation. The sanctions are intended primarily to have a deterrent character and can quickly add up to millions of euros.
Legal uncertainty for companies: What will apply from June 8, 2026?
The sanctions of such proceedings affect the Federal Republic as a state. In addition to possible fines, Germany also faces a certain loss of reputation.
But companies, HR and employees are also indirectly affected. Lawyer and partner Dr. Alexander Insam from Görg Partnership of Lawyers says: “In principle, employees cannot directly invoke the Pay Transparency Directive against private companies. The directive therefore does not automatically replace a missing national implementing law.”
Nevertheless, the directive is already effectively becoming the new reference framework for transparency and equal pay discussions. The background is primarily the obligation of national courts to interpret existing national law in accordance with the directives and case law that is increasingly influenced by EU law.
Obligations to provide information: Where the EntgTranspG ends – and the ETRL begins
Lawyer Annabelle Manganaro (also from Görg): “This comes into question especially when existing equal pay principles are specified and the ETRL contains clear regulations that make it easy for the legal user to apply them one-to-one, such as the inadmissibility of confidentiality clauses.”
It is more difficult when the Transparency Directive provides for new mechanisms, thereby leaving greater scope for implementation. In these cases, the German legislature must first take action. One example is the expanded information and disclosure obligations towards employees.
According to Articles 6 and 7 of the Directive, they have a right to information about the average pay for the same work or work of equal value, broken down by gender, and a right to information about the underlying pay criteria. In contrast, the current German Pay Transparency Act (EntgTranspG) has so far only provided for a much narrower individual right to information. “If the existing law regulates the right to information, this regulation also applies after the implementation period has expired, until the new Pay Transparency Act changes the regulation,” says Manganaro.
Equal pay lawsuits: What HR should do now
In addition, the following applies: Obligations that are contained in the European directive but which do not yet have a recognizable equivalent in German law may also apply from June 8, 2026 – i.e. after the implementation deadline has expired. “This concerns, for example, the obligation to provide information about the starting salary or salary ranges during the application process, as well as the ban on asking applicants about their previous salary,” says lawyer Insam. Here, individual BAG judges are already arguing that corresponding obligations are derived from the BGB (§§ 311 paragraph 2 and 241 paragraph 2). This view has so far been viewed critically in the specialist literature, but according to Insam and Manganaro it could become established in the light of the BAG’s European law-friendly interpretation in recent years.
Insam clearly recommends that companies and HR take the pay transparency directive seriously now, despite the pending national implementation, and – if they have not already done so – prepare promptly for the upcoming requirements. “The risk of equal pay lawsuits in particular exists on the basis of couple settlement case law, and employers should be able to document and justify executive compensation decisions and salary differences in each individual salary component with the help of the compensation systems and personnel files.”
Kirstin Grundel deals with the topics of compensation & benefits, remuneration and company pension schemes. She also works as an editor for the magazine “Comp & Ben”. She is the editorial contact for the Total Rewards practice forum.
