Key takeaways for employers

• Reporting Requirements: The Commission recommends that pay transparency reports are based on gross remuneration actually paid, rather than target earnings. Employers should have flexibility in how they present variable and supplementary pay components, provided basic and additional elements are clearly distinguished. Minor benefits in kind may be excluded under a de minimis threshold.
• Collective Agreements: Employers subject to collective agreements may use pay groups for comparison and benefit from extended deadlines for responding to pay transparency inquiries. However, collective agreements do not automatically guarantee compliance with gender equal pay requirements.
• Right to Information: Employees will have the right to request annual pay data, starting in June 2027. Requests are limited to once per year and should include clear explanations of how comparison groups are formed. The use of hypothetical groups or inclusion of former employees in comparison groups is not permitted.
• Digitalization: The Commission strongly advocates for digital tools to support employers, including automated pay gap analyses, standardized reporting templates, and government-provided portals for employee information requests. These measures are especially important for reducing administrative burdens, particularly for small and medium-sized enterprises.

The Commission’s report is advisory and not legally binding, but it will serve as a key reference for legislators as they draft the national implementation law, expected by January 2026. Specific compliance requirements will be set once the law is enacted.

Report summary

In July 2025, the German government appointed an independent Commission of Experts to develop practical recommendations for implementing the EU Pay Transparency Directive (EU 2023/970) with minimal bureaucracy and maximum legal clarity. The Commission was composed of leading academics, employer and employee representatives, HR professionals, and legal experts, ensuring a broad and balanced perspective on the challenges facing employers.

The Commission’s work was guided by several core objectives: to promote equal pay for equal work and for work of equal value, strengthen transparency rights for employees, and ensure that new reporting and information obligations are both effective and manageable for companies. The Commission’s deliberations focused on three main areas: the scope and definition of remuneration for reporting purposes, the design of the right to information for employees, and the role of digitalization in reducing administrative burdens.

Reporting obligations and definition of “remuneration”

The Commission recommends that the reporting requirement should focus on gross remuneration actually paid, including both annual and hourly figures, calculated on contractually agreed working hours. Employers should have flexibility in how they present variable and supplementary pay components, provided they clearly distinguish between basic and additional elements. Minor benefits in kind may be excluded under a de minimis threshold. For companies bound by collective agreements, pay groups may be used for comparison, and extended deadlines for responding to inquiries are recommended. However, the fact that collective agreements are in place is no automatic guarantee that the remuneration paid on the basis of these agreements is compliant with gender equal pay requirements.

Joint pay assessment and employee representation

The Commission addressed the complexities of joint pay assessments, particularly in companies without employee representatives. It concluded that such companies should not be required to create representative bodies where they don’t yet exist, solely for compliance purposes. Rather, joint pay assessments may be waived in these cases. Nevertheless, employers must inform and consult employees during remedial procedures. The Commission also discussed the involvement of (existing) works councils and trade unions in the process, recommending clear legal definitions and practical guidance for their roles.

Right to information

Employees will have the right to request annual information on total gross remuneration, broken down into annual and hourly figures, starting June 2027. The Commission recommends that requests be limited to once per year for the previous calendar year. Hypothetical comparison groups should not be used and comparison groups should only include current (not former) employees. Employers must provide clear explanations of how comparison groups are formed, but are not required to provide detailed breakdowns of individual pay components.

Digitalization and administrative relief

Recognizing the administrative challenges, the Commission strongly advocates for digital solutions to support employers. Recommended measures include automated pay gap analyses, standardized reporting templates, digital portals for employee information requests, and early warning systems for identifying pay disparities. The Commission encourages the federal government to provide these tools, with a particular focus on supporting small and medium-sized enterprises.

The Commission’s report is advisory and not legally binding, but it will serve as a key reference for legislators drafting the national implementation law, expected by January 2026. Some issues remain open, such as the possibility of consolidated reporting for corporate groups and the harmonization of pay transparency obligations with other reporting requirements, such as those under the Corporate Sustainability Reporting Directive (CSRD).

Recommendations

International companies operating in Germany should act early to align with these upcoming requirements:

• Start by reviewing pay structures and reporting processes to ensure they can accommodate gross annual and hourly figures, clear separation of pay components, and transparent comparison groups. Consider how collective agreements, if applicable, will impact reporting obligations and deadlines.
• Although not specifically flagged by the Commission, consider the requirements to be observed for establishing comparison groups when it comes to defining equal work and work of equal value, this might lead to different grouping of comparable roles than foreseen under the applicable pay scheme.
• Explore tools for automated pay gap analyses, standardized reporting templates, and secure portals for employee information requests. Digital readiness will be critical. Investing in these solutions now will reduce administrative burdens and position organizations for smooth compliance.
• Finally, engage HR and legal teams to update internal policies, train managers, and prepare for employee inquiries starting in 2027. Early action will not only reduce legal and reputational risks but also demonstrate commitment to pay equity and compliance across jurisdictions.

Our team can help you design compliant, efficient pay structures and reporting processes tailored to your global operations. Contact us to discuss how these changes impact your organization and what steps you should take now.