Pay Transparency Directive: What German Startups Must Do Before June 7, 2026
Startups under 100 employees are not exempt. The individual rights under the EU Pay Transparency Directive apply from hire number one starting June 2026.
Key Summary
The EU Pay Transparency Directive 2023/970 takes effect in German law by 7 June 2026. Reporting obligations kick in at 100 employees, but three rules apply to every employer regardless of size: salary bands must be disclosed before interviews, asking about salary history is prohibited, and every employee gains a right to individual pay information. Germany will likely miss the transposition deadline, which creates a narrow direct-effect question rather than an exemption.
Most German startup founders I talk to this spring still think the Pay Transparency Directive is a problem for companies with 100 employees or more. That framing is wrong, and acting on it will cost you.
Three rules in the Directive apply to every employer from employee number one. The 100-employee threshold you have read about only governs the reporting obligation. Salary bands in job ads, the ban on salary-history questions, and the individual pay-information right apply to your three-person team the same way they apply to Siemens.
The startup trap: "we're too small" is wrong
The existing Entgelttransparenzgesetz (EntgTranspG) from 2017 has a 200-employee floor in § 10 for the individual Auskunftsanspruch. Most founders I have onboarded as employers have either heard this number or something like it, and treat pay compliance as a problem for later. The new Directive breaks that assumption in two places.
First, the Directive's reporting threshold under Article 9 is 100 employees, not 200. Germany's expert commission, which reported to the Federal Ministry for Family Affairs (BMBFSFJ) in November 2025, explicitly recommends not extending the reporting obligation below 100.
Second, and this is the point that gets missed: the individual rights under Articles 5 and 7 have no size threshold at all. Once Germany transposes, every employee and every applicant can invoke them against every employer.
Three rules that hit every German startup from 7 June 2026
Salary bands before the interview. Article 5 requires that candidates receive information on the starting salary or salary range before the first interview. The commission's view is that publishing the band in the job ad is the cleanest path, though sharing it with the interview invitation also works. If your last job ad said "competitive salary", that line becomes a liability.
No more salary-history questions. Article 5 also prohibits asking applicants what they currently earn or what they earned in previous roles. This is a cultural change, not just a legal one. In my hiring mandates, recruiters still reach for "what are your expectations" and "what are you on now" as the opening questions. You have roughly two months to retrain them.
Individual pay-information right. Article 7 gives every employee the right to request, in writing, their individual pay level and the average pay of employees doing the same or equivalent work, broken down by gender. The employee does not need to show discrimination to ask. You must respond within two months. The Expert Commission recommends preserving a data-protection floor analogous to § 12 EntgTranspG: where the comparator group contains fewer than six employees of the other gender, the answer is aggregated. That is a recommendation to the legislator, not yet law, and the final transposition may calibrate the threshold differently.
Reporting: when (and whether) your startup lands in it
| Employee count | Reporting frequency | First report |
|---|---|---|
| Under 100 | None | n/a |
| 100-149 | Every 3 years | 7 June 2031 |
| 150-249 | Every 3 years | 7 June 2027 |
| 250+ | Annually | 7 June 2027 |
These are the Directive minimums. The Commission has not recommended going beyond them. The legislator is not bound by that recommendation, but as of April 2026 there is no published signal that the ministry intends to go further. Plan against this table, and watch the Referentenentwurf when it appears. If your headcount plan takes you across the 100 or 150 line in 2027-2028, that is the moment to build the reporting workflow, not the moment the report is due.
What changes if Germany misses the deadline
As of April 2026, no draft bill has been published. The Federal Ministry for Family Affairs is still in internal coordination on the Commission's report. On that timeline, most commentators expect the 7 June 2026 deadline to be missed.
If Germany misses it, the answer is more nuanced than "the Directive applies anyway". EU directives do not bind private employers directly without transposition. This is the classic horizontal direct effect doctrine (Faccini Dori). The old EntgTranspG from 2017 stays in force, with its 200-employee floor for § 10 requests. From 8 June 2026 onwards, German courts are nonetheless required to interpret existing statutes (EntgTranspG, AGG, § 241 II BGB) consistently with the Directive (Marleasing, von Colson), which can produce similar outcomes for applicants and employees in individual cases.
Two qualifiers matter, though. Article 157 TFEU, which underpins the equal-pay principle, does have horizontal direct effect under Defrenne II. The substantive equal-pay obligation binds private employers regardless of transposition. The BAG reached a similar outcome in its landmark decision of 16 February 2023 (8 AZR 450/21), applying § 3 and § 7 EntgTranspG together with the § 22 AGG presumption against the background of Art. 157 TFEU, and held that superior negotiation by the male comparator is not a gender-neutral justification for paying a woman EUR 1,000 less per month. The transparency mechanisms in the Directive are a different question: they reinforce Art. 157 but may not themselves have direct effect between private parties until transposed.
For a founder, the practical takeaway is: do not bet on the gap. Plan for 7 June 2026 as if the new rules apply, because even if the formal transposition slips, the first claimant who tests the Art. 157 argument at the labor court will not be kind to an employer who had five weeks' notice and did nothing.
Bottom line
Stop thinking about pay transparency as a regulation for large employers. The individual rights hit from employee one, the recruiting rules hit from job ad one, and the transposition uncertainty does not give you an extra year. Publish bands, retrain recruiters, build the comparator query. The founders I see moving on this in April and May will have cleaner hiring processes six months from now. The founders waiting for the Gesetz to appear will be writing retroactive job-description documents in July while dealing with their first Auskunftsanspruch.
For the broader landscape of EU directives hitting German startup employers in 2026, see the analysis of the Platform Work Directive. For the separate compliance track on data subject rights and DPO thresholds, see GDPR basics for B2B SaaS.
Legal Sources
- §Directive (EU) 2023/970 — Pay Transparency Directive. Articles 5, 7, 9, 18, 23, 34
- §Art. 157 TFEU — Principle of equal pay for equal work between men and women; horizontal direct effect under Defrenne
- §§ 10 EntgTranspG — Individual right to information under existing German Pay Transparency Act; threshold 200 employees
- §§ 12 EntgTranspG — Scope and data protection floor for individual Auskunftsanspruch (six comparator minimum)
- §§ 17 EntgTranspG — Voluntary audit encouragement for employers with more than 500 employees
- §§ 22 AGG — Burden of proof reversal for discrimination claims
- •BAG, 8 AZR 450/21, — Negotiation skill is not a gender-neutral justification for pay differences between men and women performing equal work; presumption under § 22 AGG.
- •BMBFSFJ Expert Commission final report (Nov 2025) — Recommends limiting reporting obligations to employers with at least 100 employees, in line with Directive minimum; no extension to smaller firms.
Frequently Asked Questions
- Does the Pay Transparency Directive apply to my startup if I have fewer than 100 employees?
- The reporting obligations do not apply below 100 employees. The individual rights do. Salary disclosure before interviews, the ban on salary-history questions, and the pay-information right under Article 7 apply to all employers regardless of size.
- What exactly changes in job ads from June 2026?
- Under Article 5, candidates must receive information about the starting salary or salary range before the first interview. In practice that means publishing the band in the job ad or sharing it with the interview invitation.
- Can I still ask candidates about their current salary?
- Not under the Directive. Article 5 prohibits salary-history questions. The current EntgTranspG does not prohibit them, so the change takes effect once Germany transposes, or potentially earlier via Article 157 TFEU.
- What happens if Germany misses the 7 June 2026 deadline?
- The existing EntgTranspG (2017) stays in force, with its 200-employee threshold for individual information requests. The new applicant and salary-history rules would not automatically bind private employers; direct effect of directive provisions between private parties is limited. Art. 157 TFEU on equal pay does have horizontal direct effect under Defrenne, but its reach is narrower than the Directive.
- When does reporting start for a startup that grows past 100 employees?
- Under Article 9, employers with 100-149 employees report every three years starting 7 June 2031. 150-249 report every three years starting 7 June 2027. 250+ report annually starting 7 June 2027.
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