Germany’s Gender Pay Equity Act

Berlin GermanyThe German Bundestag passed the “Act on Transparency of Pay” on May 12th, 2017 in an attempt to shrink Germany’s gender pay gap, which is larger than that of other European countries. While the gender pay gap has decreased over the past several years, it still stands at 21% vs. 16.5% for Europe as a whole, according to Germany’s Federal Statistical Office (DeStatis). The adjusted pay gap, which compares the wages of men and women in the same job, is 6%. The new legislation will go into effect in July 2017.

In our recent webinar: Labor & Employment Law Trends in Europe, our guests DLA Piper explained some of the ramifications of the new law:

Companies with 200+ Employees:

  • Employees can request information about average pay of comparable employees of opposite gender
  • Data can only be provided if there are at least 6 comparable employees of opposite gender, in order to protect data privacy
  • Request can cover information about base salary + 2 additional pay components (e.g. bonus amounts)
  • Employer must respond within 3 months

Companies with 500+ Employees:

  • These companies are “encouraged” to implement regular audits to determine pay gaps
  • If required to publish management reports, they must report about measures to ensure equality and equal pay

 According to a report by Baker Mckenzie, employees may begin requesting information in January of 2018 and must submit such requests in writing either through the works council or the employer. The employees may also specify who they think are comparable employees to themselves, and employers have three months to respond to the request, although at this time there are no penalties in place for missing the deadline.

Companies with 500+ employees can elect to audit their pay gaps, but if they do so, they must report out on the findings, which leaves them open to law suits from their employees. The law does not state specific punishments for unequal pay, but there is basis in existing law for salary adjustment and compensation in cases where pay is found to be inequitable.

 

Click this link to watch a recording of the DLA Piper webinar.

You can read the entire Backer Mckenzie article, “The Transparency of Pay Act at a Glance” here.