“Equal pay for equal work” is a principle that is still not consistently applied in many companies. With the EU Pay Transparency Directive and Germany’s updated Pay Transparency Act, that will change. By June 7, 2026, all EU member states must implement the directive into national law. For HR teams, this means more responsibility, and it also creates a major opportunity to strengthen fairness and transparency in pay structures.
This article explains what the law means in practice, which new obligations employers will face, and how HR teams can prepare strategically. It also includes an example of how a mobility budget can serve as a fair, transparent, and tax-compliant employee benefit.
Germany introduced the Pay Transparency Act (Entgelttransparenzgesetz) in July 2017 to reduce the gender pay gap and improve visibility around wages. The new EU Pay Transparency Directive (EU 2023/970) requires all member states to adapt their national laws by June 7, 2026. For Germany, this means an update to the existing act with broader obligations and new compliance rules that will affect how HR teams handle recruitment and compensation.
Talking openly about pay is still uncommon in Germany. This lack of transparency often hides unequal pay. In 2023, women earned on average 16% less than men: €22.24 gross per hour compared with €26.34. The gap was smaller in eastern Germany at 5% than in western Germany at 17%.
Several factors drive this imbalance. Many female-dominated professions such as care and education are still paid less than other fields, about 17% less on average. Even when comparing men and women in the same role with similar qualifications, a 6% pay gap remains. That means a woman earning €2,820 gross would make €180 less than a man earning €3,000 in the same position.
Women also take on more unpaid care work and are more likely to work part-time, which limits career progression and long-term income growth.
Although the gap has narrowed over time, Germany still ranks near the bottom in Europe. Only a few EU countries report wider gaps. By contrast, Belgium, Italy, and Romania report gaps below 4%.
The Pay Transparency Act, effective since July 2017, aims to ensure equal pay for equal work and strengthen equality in the workplace. It applies primarily to companies with more than 200 employees and gives workers the right to information about pay structures.
The law’s main goal is to create transparency in pay systems and eliminate unjustified pay differences between men and women. It encourages fair, objective, and non-discriminatory compensation practices.
Employees can request the criteria used to determine their pay and the average gross pay, including bonuses and benefits, for employees of the opposite gender in comparable roles. Requests can be made every two years in writing. If pay discrimination is revealed, employees can demand salary adjustments and back payments.
Companies with more than 500 employees must regularly audit pay structures and publish results. If gender-based pay discrimination is found, corrective measures are required.
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The current German law focuses on employees’ right to information. The EU directive shifts responsibility toward employers and introduces stricter reporting obligations with real enforcement. For HR departments, that means more work and also the chance to actively shape fair pay structures.
1. Pay transparency in recruiting
Employers must disclose salary ranges to applicants before interviews. Asking about previous pay is prohibited.
2. Extended right to information
Employees will gain access to the median pay for comparable roles, up to two additional pay components, and the objective criteria used to set pay. Employers must provide this information within two months.
3. Regular pay reporting
4. Sanctions for non-compliance
If discrimination is proven, employers must compensate affected employees. Once a claim is plausible, the burden of proof lies with the company.
The directive requires system updates and a cultural shift. HR teams should:
The directive doesn’t just affect base salaries - it covers all forms of remuneration, including:
All of these count as part of total compensation and must be included in pay analyses and reports. Benefits must be offered equally to all employees, not only to specific groups such as managers or full-time staff.
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Get infoPreparing for the EU directive is both a compliance task and a strategic opportunity. The following steps help HR teams get ready:
Review all pay components and perks. Use objective job evaluation methods to make pay structures transparent and comparable.
Compare compensation across gender and job levels. Where differences cannot be justified, take corrective action through salary adjustments or structural changes.
Ensure HR systems can collect and export the required data. Assign responsibilities and create a roadmap for reporting and disclosure starting in 2026.
Communicate openly about pay structures. Train managers, inform staff about their rights, and foster a culture where fairness and equality are visible values.
A mobility budget is a modern HR tool that combines fairness, flexibility, and tax efficiency. Employees receive a monthly allowance to use across different modes of transport — from public transport and the Deutschlandticket to bike or scooter sharing. Platforms like NAVIT make managing and using mobility budgets easy through an app or mobility card.
Why it supports pay transparency:
Mobility budgets ensure that all employees have access to the same mobility benefits – regardless of position or working hours – and can be seamlessly integrated into pay and benefits reporting.
With NAVIT, HR teams can manage mobility budgets digitally, ensure tax compliance, and connect them with payroll. This reduces administrative effort, increases legal certainty, and guarantees equal access to benefits.
The Pay Transparency Act in 2026 is more than a legal requirement. It is an opportunity to establish fairness, equality, and trust. Companies that act early will stay compliant and strengthen their employer brand. By combining transparent pay structures with inclusive, well-documented benefits such as a mobility budget, HR teams can position their company as a forward-thinking and equitable employer.
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