The EU Pay Transparency Directive Is Coming. Most Companies Aren't Ready.
The EU Pay Transparency Directive was formally adopted in May 2023. Member states have until June 2026 to transpose it into national law. That sounds like plenty of time. It isn't.
For most companies hiring in Germany and across the DACH region, the changes this directive requires are not cosmetic. They touch job adverts, interview processes, internal pay structures, and annual reporting obligations. If you haven't started working through the implications, you're already behind.
Here's what you actually need to know.
What the Directive Requires
The headline requirement most people have heard about is salary disclosure in job postings. Under the directive, employers must provide candidates with information about the starting salary or pay range for a role before the first interview. You can no longer wait until offer stage. You certainly can't ask candidates what they currently earn and use that as your anchor point; that practice is explicitly prohibited.
That's significant on its own. But it's not the whole picture.
Employees gain a new right to request information about average pay levels, broken down by gender, for colleagues doing the same work or work of equal value. Employers with 100 or more staff will be required to report gender pay gap data annually (for those with 250+ employees) or every three years (for those with 100-249). Where a gender pay gap of more than 5% exists and cannot be justified by objective, gender-neutral criteria, employers will be required to conduct a joint pay assessment with employee representatives.
The burden of proof in pay discrimination disputes also shifts. Under the directive, it will fall on the employer to demonstrate that no discrimination occurred, not on the employee to prove that it did.
Why Germany Is a Particular Case
Germany already has the Entgelttransparenzgesetz (the Pay Transparency Act) which has been in force since 2017. That legislation gives employees in companies with more than 200 staff a right to request information about comparable pay. In practice, it has had limited impact. Enforcement has been weak, take-up of the individual rights has been modest, and it doesn't cover the full scope the EU directive introduces.
The new directive changes the picture considerably. It applies to all employers, not just larger ones (though reporting thresholds vary by headcount). It has teeth in the form of sanctions that member states must make "effective, proportionate and dissuasive." And it closes the loophole that allowed pay practices to remain opaque as long as nobody formally complained.
German companies that assumed the existing legislation covered their obligations will need to reassess. The two frameworks are not the same.
What This Means for Your Hiring Process
You need salary ranges on job adverts. Not a vague "competitive salary" line. Not "dependent on experience." An actual range, or at minimum a starting salary figure. This is a compliance requirement, not a preference. Get comfortable with it now, because candidates are already starting to expect it regardless of the legal deadline.
You need to stop asking about current salary. The directive prohibits using a candidate's salary history to set their offer. The reasoning is sound: if women have historically been underpaid, anchoring new offers to their current salary perpetuates the gap. Train your hiring managers and your recruitment partners accordingly.
You need defensible, documented pay structures. If any employee or candidate can request information about what comparable colleagues earn, you need to be able to explain why salaries are set as they are. "That's just what we agreed at the time" won't hold up. Pay grades, job levelling frameworks, and clear criteria for how experience translates into salary position are no longer nice-to-haves.
What This Means for Your Existing Workforce
This is where things get genuinely uncomfortable for a lot of organisations. It's one thing to show your hand on future hires. It's another to do an honest audit of what you're currently paying and find inconsistencies that you can't explain.
That audit is coming whether you initiate it or not. An employee can request pay comparison data. If the numbers are awkward, you'll be dealing with it reactively, under scrutiny. Companies that get ahead of this, identify gaps, and address them proactively are in a materially better position than those that don't.
It's also worth thinking about what disclosure does to internal dynamics. In firms where salaries have historically been treated as strictly private, the cultural shift can be as significant as the legal one. Some employees will discover they're paid less than they expected. Some managers will be asked questions they don't have good answers to. Preparation matters.
For Candidates: What You're Entitled To
If you're a professional working in Germany, or considering a move, this directive changes your position at the negotiating table. You are entitled to know the pay range before the interview. You cannot be asked what you currently earn. And once in a role, you can request information about what colleagues in comparable positions are being paid on average.
That last right is genuinely new. It doesn't mean you'll see anyone's individual salary. But if you've ever had the nagging sense that you might be underpaid relative to peers, you'll have a formal mechanism to test that instinct.
Use it.
The Practical Timeline
June 2026 is the transposition deadline. In practice, the legislation that emerges in Germany may add specific requirements on top of the EU baseline. Companies that wait until the law is formally enacted in German legislation before starting to act are giving themselves almost no runway.
The minimum viable starting point right now: start putting salary ranges on job adverts, stop asking candidates about current earnings, and commission an internal pay audit if you haven't done one recently. None of those things require the directive to be enacted to be worth doing.
The ones who find it hardest when June 2026 arrives won't be the companies with complicated pay structures. They'll be the ones who assumed they had more time.
MAM Gruppe works with companies across Germany and the DACH region on senior recruitment in Technology, Legal, Compliance, and Finance. If you're working through how to position roles in a more transparent hiring environment, we're happy to talk through what we're seeing in the market.
