New EU law means employers must disclose salary in hiring process

A new EU law on pay transparency should bring widespread benefits for employees. EU member states must transpose the directive into national legislation by June 2026.

New EU law on pay transparency

The European Commission is set to adopt a new law on pay transparency. In future, all employers operating in the EU, regardless of company size, will have to follow the new rules.

The rules are designed to make the hiring process and employment conditions fairer for employees. Employers will be obliged to use gender neutral language in job descriptions and titles. They will also be obliged to inform prospective employees about starting salaries or pay ranges, either in a job advertisement or during an interview.

Employers will be forbidden from asking prospective employees about their salaries in previous roles. If a prospective employee is hired, the company will also be forbidden from including a clause in their employment contract which forbids the employee from discussing their salary with colleagues. 

Workers will also be newly entitled to request information on average salaries within their company, broken down by sex and role. Employees who prove they have experienced pay discrimination, in relation to salary, bonuses or other benefits, will be able to claim compensation.

Larger companies will have to report on gender pay gaps

Under the law, larger companies will also be obliged to file regular reports on any potential pay gap between men and women in the same roles. 

Companies with 250 or more employees will have to file these pay gap reports annually and companies with 150 to 249 employees will have to file every three years. Companies with 100 to 149 employees will have to file every three years starting June 7, 2031.

According to the Federal Statistical Office (Destatis), women in Germany currently earn an average of 16 percent less than men. The gap varies greatly in eastern and western federal states. In western federal states (and Berlin), women earn an average of 17 percent less, compared to 5 percent less in eastern federal states (except Berlin).

If companies file a report which finds a gender pay gap of more than 5 percent for men and women in the same roles, the EU law will consider this unjustifiable. Companies will be required to conduct an assessment alongside employee representatives and implement changes or face fines.

The rules will also apply to companies registered outside the EU that have 100 or more employees living in EU states. EU member states now have until June 7, 2026, to transpose the new directive into national employment law.