Published legislation and draft legislation - Germany

Transparency to tackle the wage gap

Wage Transparency Act

On January 6th the Wage Transparency Act became law in Germany, the draft of which we discussed in  issue 10 of Progreso, to drive wage equality between men and women for the same or equivalent job.

With this law, the German parliament is trying to tackle the wide wage gap - 21% - accounted for by structural and sociological factors, such as the type of jobs people do, women’ disproportionately low presence in senior management, leaves of absence from work for childcare, etc.

Even when these causes are stripped out, the Act estimates that the wage gap is around 6% for the same job. It is therefore establishing wage transparency as a fundamental right, which is considered of benefit not only to employees but also to employers, since it generates trust and shows that companies and authorities encourage and defend income equality.

The law bans any kind of direct or indirect discrimination on grounds of gender that affects any component of remuneration or payment conditions. It confers an individual right to disclosure for employees in companies with 200 or more members of staff to be informed of the average wage of at least six colleagues of the opposite sex occupying the same positions or carrying out comparable work in the company. In addition, they can ask to be told the criteria and procedures employed by the company when setting wages. This will make it easier for people to make legal claims to enforce their right to receive the same payment for the same job.

It also obliges all private-sector companies with more than 500 employees to report on wage and gender equality in their annual management report. Specifically, they will have to explain what measures the company has adopted to promote gender equality.

The passing into law of the Wage Transparency Act brings Germany a step closer to gender equality and is aligned with other initiatives such as that carried out by Iceland, which we also discuss in this issue of Progreso.