Equal Pay and Pay Transparency: Current Legal Situation
The requirements for gender-equitable pay have become significantly stricter in recent case law. At the latest since the landmark ruling of the German Federal Labour Court (BAG) in 2025 on the so-called “pair comparison”, it has been established that naming just a single person of the opposite sex who earns a higher salary is sufficient.
At the same time, the EU Pay Transparency Directive (ETRL) introduces a new Europe-wide standard that goes far beyond the existing German Pay Transparency Act of 2017.
What is the Pay Transparency Directive?
The EU Pay Transparency Directive (Directive 2023/970), adopted in 2023, aims to support equal pay between men and women. Its guiding principle is: “Equal pay for equal work or work of equal value.”
Key innovations at a glance:
- Salary transparency in the application process: Before the first job interview, applicants must be informed about the salary or salary range.
- Right to information during employment: Employees have the right to request information from their employer, for example on the criteria used to determine their pay.
- Applies to all companies: Core obligations, such as salary transparency in recruitment, apply to all companies regardless of size, including SMEs.
When does the Pay Transparency Directive apply?
Key date: June 7, 2026: By this date, the directive must be transposed into national law. If this does not happen in time, the principle of direct effect of EU law applies. The new transparency obligations and burden-of-proof rules will therefore be binding for companies from June 2026 at the latest—regardless of whether the German Pay Transparency Act has been amended by then or not.
Webinar
Pay Transparency Directive
In our free webinar, you will learn which new obligations companies will face—and which of them must be implemented by June 2026.
Legally Compliant Implementation through a Pay Transparency Audit
As part of a tailored pay transparency audit, we review your company’s existing processes together with you and support you in making any necessary adjustments. You decide the scope of our advisory services.
Possible components of a pay transparency audit:
- Review of existing salary structures and documentation, including potential contract adjustments
- Review and revision of HR processes, including in relation to disclosure obligations and recruiting
- Support in preparing a pay transparency report (mandatory for companies with 100 or more employees)
Benefits of a Pay Transparency Audit by MKM LEGAL
Technical expertise: Professional analysis of your individual compensation structures by specialized employment lawyers
Gap analysis: Early identification and correction of pay disparities
Strategic advisory: Optimization of your processes for long-term compliance
Minimization of legal risks: Preventive avoidance of fines, litigation, and reputational damage
Your Employment Law Experts at MKM LEGAL
Our specialist employment lawyers provide you with tailored advice based on many years of practical experience. We see ourselves as a strategic partner for SMEs and understand that legal certainty must also be economically viable. Therefore, we place particular emphasis on a pragmatic assessment of the legal situation and on developing robust concepts for your HR operations.
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Specialist lawyer for construction and architectural law
Specialist lawyer for labor law