A new law giving employees in Germany rights to information about the pay of co-workers will be introduced on 1st July. The law will impose new reporting requirements on companies to reveal how they maintain fair pay.
The Remuneration Transparency Act applies to legal entities with more than 200 employees. It gives employees the right to ask for details of the median average pay of a minimum of six employees of the opposite sex in comparable positions.
Till Basfeld, who advises on employment law in Munich for law firm DLA Piper, writes that: “…the Transparency Act will increase the administrative burden, in particular for larger companies with more than 200 employees, given that each employee has an individual claim to information about comparable remuneration.”
Information about the average income of co-workers in comparable positions can be asked for, broken down by the monthly base salary and two additional salary elements (e.g., bonus payments or company car benefits).
The information can be requested from the employer or the work council and must be provided within three months of asking. The way the remuneration is worked out must also be provided to the employee. The right can be exercised by each employee every two years (every three years within the first three years of the Act coming into force).
The Act also requires legal entities with more than 500 employees to publish reports about the steps they take to ensure equality and equal pay, and their effects every three years (or five years if collective bargaining agreements are in place). It also encourages firms of this size to bring in a regular audit to assess and counteract pay gaps (though this is not compulsory).