September 19, 2017
Entgelttransparenzgesetz – The German Remuneration Transparency Act
The German Remuneration Transparency Act (Entgelttransparenzgesetz) promoting transparency in pay structures went into effect on July 6, 2017. The Act regulates a personal right to information for employees, which can be initially exercised six months after the Act takes effect, voluntary company audits and reporting obligations.
The Remuneration Transparency Act contains an explicit equal pay provision. This equal pay provision specifies that employers may not, solely based on gender, offer or pay out remuneration at a lower rate than what they would pay for the same work performed by an employee of the other sex.
Personal right to information
The Act gives all employees of any business with generally more than 200 employees the right to request access to information regarding their pay and how it is calculated as well as remuneration paid for the same or similar jobs. This enables employees to make sure that their employer is in compliance with the equal pay provision.
The Act requires employers to provide information on comparative remuneration (remuneration paid for the same or similar jobs) as a statistical median. Employees may also request to see the statistical median for one to two individual remuneration components, e.g. incentive bonuses or hardship allowances.
Employers with generally more than 500 employees are asked to regularly conduct company audits to review their remuneration policies as well as the various remuneration components for compliance with the equal pay provision. Companies are not obliged to conduct these audits. Should an employer decide to conduct a company audit pursuant to the Remuneration Transparency Act, that employer must comply with the audit process described in the Act (assessment of the current situation, analysis, results reporting).
All employers required to prepare a management report pursuant to secs. 264 and 289 German Commercial Code (HGB) and with generally more than 500 employees are under the obligation to also prepare a report regarding equal pay at their company. The report must include a description of measures employed to promote equality of men and women as well as measures to guarantee equal pay.
Employees may begin exercising their personal right to information on January 6, 2018. Companies are required to prepare their first report in compliance with the Remuneration Transparency Act in 2018. The current reporting period only covers the year 2016.