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The Pay Transparency Act: Right to Information as of 6 January 2018

The Act to Promote the Transparency of Pay Structures Between Women and Women (the Pay Transparency Act) takes effect at the start of July. It is designed to make internal pay systems more transparent and promote equal pay for men and women.

The Act primarily introduces:

1) an individual right to information for employees

If a business typically has more than 200 employees with the same employer, employees can request information about the company’s internal criteria and procedures for determining pay. If at least 6 employees of the other gender perform similar work, employees also have a right to be told the benchmark pay amount.

Unequal treatment may be justified e.g. due to regional differences, different qualifications and differences in performance. But if it is not justified, the employee may take legal action seeking the difference between his or her actual pay and the benchmark pay.

2) a pay report

If an employer typically has more than 500 employees and is required to prepare a management report, it must also prepare a pay report, which is to be published in the Federal Gazette alongside its financial statements and management report.

This report primarily concerns measures
– to promote equality; and
– to create equal pay
between men and women, citing both
– qualitative information (e.g. training measures, work/life balance); and
– quantitative criteria (e.g. total number of employees broken down by gender, as well as full- and part-time employees).

The first report is to be prepared in Calendar Year 2018, for Calendar Year 2016. From then on a three-year cycle applies for employees subject to a collective bargaining agreement and a five-year cycle applies for other employees. A reporting duty does not exist for corporate groups.

A striking feature of the Act is that companies which do not prepare or publish a pay report are not subject to legal penalties. Instead, the lawmakers rely on negative publicity: a clear sign that they were focused on capital market-oriented companies, rather than small and mid-sized businesses. This violation is also to be reported in the audit report, which is not meant for public consumption.

Literature: Kolb/Heinek, WPg 2017, 1243.

Transparenz

Mark Schüttler
MOORE STEPHENS Westfalen AG

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