Pay Transparency Directive: Implementation deadline has passed without result – but what now?

The deadline for implementing the Pay Transparency Directive on 7 June 2026. In Germany, there isn’t even a draft bill yet. Realistically, an implementing act is unlikely to be adopted before January 2027. And Germany is not alone in this. Whilst countries such as Belgium, Poland and Malta have already taken some steps towards implementation, legislators in Denmark, France and the Netherlands announced some time ago that implementation would not take place until 1 January 2027 at the earliest. The Swedish government has recently caused quite a stir. Although – or perhaps precisely because – Sweden is regarded as a pioneer in pay transparency, it was decided there not to transpose the Pay Transparency Directive for the time being and instead to push for a revision of the directive. The directive is said to be too bureaucratic and administratively burdensome. There are fears that the successes already achieved on the path to gender equality could be jeopardised by the implementation of requirements deemed too formalistic.

Although the argument is certainly valid, this approach nevertheless demonstrates a remarkable understanding of the binding nature of decisions at EU level. The legislator has given Member States three years to transpose the requirements into national law. Calling for an amendment to the directive now, less than three months before the transposition deadline expires, seems unlikely to succeed. Given the processes and structures of law-making at European level, amending the directive would take years rather than months. And that applies even if there were a political consensus on the need for change, which I cannot currently discern.

Supporters of the directive also accuse the German legislature of mere inaction. That is likely to be an oversimplification. The planning within the Federal Ministry for Education, Family Affairs, Senior Citizens, Women and Youth would certainly allow for the rapid submission of a draft bill. What is holding things up is the lack of political will. Fears of a bureaucratic burden on businesses are complicating implementation. The concerns expressed in Germany are similar to those in Sweden, even though Germany still lags significantly behind Sweden in the area of gender equality.

The current federal government has not made much headway with its attempt to outsource the political objections to the directive to a panel of experts. The key finding of the “Commission for the Low-Bureaucracy Transposition of the Pay Transparency Directive” it appointed was the tension between designing the framework to be as unbureaucratic as possible for workplace practice on the one hand, and ensuring implementation in line with (EU) law on the other.

But what applies now that the implementation deadline has expired without result? In any case, the directive does not apply directly to private employers. Such horizontal direct effect cannot be established. EU directives are binding as as to the result to be achieved, but leave the choice of form and means to the Member States. However, sufficiently specific and unconditional provisions of a directive have direct effect vis-à-vis the State (‘vertical direct effect’). This also applies to the subdivisions of the State as a – public – employer.

Moreover, under German legal doctrine, the courts are under an obligation to interpret national law as far as possible in the light of the Directive. Since the Directive largely contains very clear provisions, an interpretation in line with the Directive should be possible in many respects. Whether the wording of the national provisions that remain in force is to be regarded as a limit is a matter of differing opinion. In anti-discrimination law, at any rate, the ECJ requires that national provisions which are not in conformity with European law be disregarded, so that even the wording of the Pay Transparency Act would not constitute a limit if the national court concludes that the provision infringes European anti-discrimination law.

On the basis of current law, the assessment of equal or equivalent work will have to be made on the basis of the criteria set out in Article 4(4) of the Pay Transparency Directive, i.e. skills, effort, responsibility and working conditions are decisive. The employer’s burden of proof, which case law derives from Section 22 of the General Equal Treatment Act (AGG), will also need to be clarified in line with the requirements of Article 18 of the Pay Transparency Directive. In other scenarios, the interpretation of national law in the light of the Pay Transparency Directive will not be clear-cut. Consequently, 7 June 2026 will bring considerable uncertainty for employers, as it will remain unclear in many respects exactly which requirements they must meet.

Quite apart from that, the European Commission will initiate infringement proceedings against those Member States that are behind schedule in implementing the Directive. This will result in financial sanctions. There is no doubt that the European Commission will insist on the strict implementation of the Directive. Its Communication on the Gender Equality Strategy 2026–2030 of 5 March 2026 states, among other things:

• The Commission will continue to support Member States in the effective and timely implementation of this Directive. (…) In addition, the Pay Transparency Directive refers to the provisions in the 2014 Public Procurement Directives, and it requires Member States to take appropriate measures to ensure that in the performance of public contracts economic operators comply with their obligations related to the principle of equal pay.