EU Pay Transparency Directive & Data Protection: What Companies Need to Know Now
With the EU Pay Transparency Directive (EU) 2023/970 (Pay Transparency Directive), companies will be required to be significantly more open regarding remuneration systems starting in 2026. The aim is to make existing gender pay gaps for equal work or work of equal value visible and to effectively reduce them through increased transparency and clearly regulated information rights. The implementation of the Directive into German law is still pending and must take place by June 7, 2026. For companies, this brings significant new obligations – also with regard to data protection and compliance. Employers should therefore address the new requirements early on to avoid liability risks.
Current Status: Where Does Germany Stand?
In Germany, the Pay Transparency Act (EntgTranspG) has already existed since 2017. However, it has so far only had a limited impact. According to the Federal Statistical Office, the unadjusted gender pay gap in 2025 was still around 16%, while the adjusted gap was approximately 6%. The EU Directive therefore sets significantly stricter standards for transparency, enforcement, and sanctions.
Key Content of the EU Pay Transparency Directive
The Directive obliges Member States to introduce comprehensive transparency regulations. The following points are particularly relevant for companies:
Transparency already in the recruitment process (Art. 5 Pay Transparency Directive)
Employers must provide applicants with information on the starting salary or the pay range. Inquiries about previous salary history are prohibited.
Individual rights to information (Art. 7 Pay Transparency Directive)
Employees are entitled to information about their individual pay as well as average pay levels for comparable work, broken down by gender. The information must be provided within a fixed period. In doing so, it must be ensured that no conclusions can be drawn about individual colleagues – a central point from a data protection perspective.
Reporting obligations for companies (Art. 9 Pay Transparency Directive)
In addition, there are reporting obligations depending on the number of employees. Companies with 250 or more employees must comply with their reporting obligation annually starting in 2027. For companies with 150 to 249 employees, a three-year reporting obligation applies from 2027, and for companies with 100 to 149 employees, a three-year reporting obligation applies from 2031. For companies with fewer than 100 employees, reports are currently voluntary, although the national legislator may provide for more extensive obligations here as well. It remains to be seen how the German legislator will implement this.
Joint pay assessment (Art. 10 Pay Transparency Directive)
If there is a gender pay gap of at least 5% that cannot be justified by objective, gender-neutral criteria and is not corrected within six months, companies must take corrective measures in cooperation with employee representatives.
Data Protection Challenges
The implementation of pay transparency inevitably involves the processing of particularly sensitive personal data. Remuneration data is subject to the requirements of the GDPR. Companies should take action early to minimize legal and economic risks.
Possible Consequences of Violations and Sanctions
Violations can lead in particular to claims for damages, including back pay and fines. Furthermore, there is a reversal of the burden of proof in favor of the employees. Exclusion from public procurement procedures is also possible.
Need for Consultation
The Pay Transparency Directive is a central compliance and data protection issue. Anyone implementing pay transparency must process personal pay data in a legally secure, structured, and GDPR-compliant manner. Early legal advice can help minimize liability risks and implement the new obligations efficiently. We would be pleased to support you in the preparation and design of transparent processes.
January 27, 2026
