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The Remuneration Transparency Act goes into effect on 1 July 2017

01Jul

The Act on the Promotion of Transparency in Remuneration Structures (Entgelttransparenzgesetz) went into force on 6 July 2017. The aim and objective of the law is to eliminate differences in salaries and wages between women and men for comparable work by encouraging the disclosure of company remuneration arrangements. This means additional red tape for business enterprises.

In the future, efforts are to be made to discourage gender-specific salary and wage differences for comparable work in the future. The Act provides for the following means to achieve this:

The Remuneration Transparency Act provides for a claim on the part of employees to individual information on remuneration structures at their company for enterprises with more than 200 employees, for instance. This only applies, however, if the work of at least six employees is performed by the other respective gender. An employer must meet a desire for information within a period of three months. The claim to information can be asserted for the first time beginning 6 January 2018.

Enterprises with more than 500 employees are furthermore called upon to carry out company audit procedures of internal company remuneration arrangements, individual elements of remuneration and the imperative of "same pay for the same work" on a voluntary basis. On top of this, for companies with more than 500 employees, which under the German Commercial Code are required to issue annual management reports, are obligated to put out a report on the current status and arrangements that have been instituted to bring about equality of salaries and wages. This report is to be attached in the annex to the annual management report and published in the Federal Gazette in 2018 for the first time.

In the new act, lawmakers strengthen company interest representation because when information is disclosed works councils are allowed to examine wages and salaries. Moreover, works councils have information and cooperation rights in the planning and implementation of the audit procedure. In spite of the wide variety of arrangements that the Remuneration Transparency Act portends, particularly for larger enterprises, there are different options both in the design and structure of non-discriminatory wage and salary structures as well as in the auditing of these. If you have any questions, including with regard to implementation in accordance with data-privacy law, just get in touch with us.