The Transparency in Wage Structures Act (german: Entgelttransparenzgesetz; EntgTranspG) is a 2017
German law
The law of Germany (german: das Recht Deutschlands), that being the modern German legal system (german: Deutsches Rechtssystem), is a system of civil law which is founded on the principles laid out by the Basic Law for the Federal Republic of G ...
enacted to promote
pay parity between men and women.
The law was strongly supported by
Manuela Schwesig
Manuela Schwesig (' Frenzel, born 23 May 1974) is a German politician of the Social Democratic Party serving as Minister President of Mecklenburg-Vorpommern since 4 July 2017. She is the first woman to serve as head of government of this state. P ...
, the
Federal Minister of Family Affairs, Senior Citizens, Women and Youth. The law seeks to guarantee
equal pay for equal work
Equal pay for equal work is the concept of labour rights that individuals in the same workplace be given equal pay. It is most commonly used in the context of sexual discrimination, in relation to the gender pay gap. Equal pay relates to the full ...
and provides mechanisms to enforce this, as well as reporting requirements for employers with more than 500 employees.
Summary
The Transparency in Wage Structures Act expressly prohibits direct or indirect discrimination on the grounds of gender with regard to all pay components and pay conditions in the case of equal work or work of equal value (§ 3). In this respect, it supplements the ' (AGG), Germany's general anti-discrimination law, which was enacted in 2006. Various means of enforcing this prohibition are specified in the law.
Individual right to information
Under the act, employers with more than 200 employees are required to, upon request, explain the basis for the employee's compensation (§§ 10 – 16). The right to lodge these requests went into effect on 6 January 2018.
For employers where a
collective bargaining agreement
A collective agreement, collective labour agreement (CLA) or collective bargaining agreement (CBA) is a written contract negotiated through collective bargaining for employees by one or more trade unions with the management of a company (or with an ...
is in effect, employees can request this information from the
works council
A works council is a shop-floor organization representing workers that functions as a local/firm-level complement to trade unions but is independent of these at least in some countries. Works councils exist with different names in a variety of re ...
(§ 14); for employers without collective agreements, employees make the request to the employer directly (§ 15). The right to information only exists when there are at least six employees who have comparable duties.
In the event of direct or indirect discrimination based on sex, the employer may be required to retroactively pay equal wages.
Operational procedures for reviewing and establishing equal pay
Private employers with more than 500 employees are encouraged to voluntarily review their compensation structures and the application thereof to ensure equal compensation (§§ 17 – 20).
Reporting obligations for employers
Any employer that has more than 500 employees and is required to issue regular management reports under the
German Commercial Code must produce a report on equality and pay parity. This report should contain the measures taken to promote the equality of women and men, the measures taken to ensure pay parity between women and men, and the results of those measures (§§ 21 - 22). If the employer does not take any measures to ensure pay parity, they must state their reasons for not doing so.
For employers that have or apply a collective bargaining agreement, reports must be produced every five years; all other employers are obligated to issue the report every three years. The report must be included in that period's management report and published in the ''
Bundesanzeiger
The ''Bundesanzeiger'' is an official publication of the Federal Republic of Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, ...
'' (§ 22).
Practical application
There are obstacles to the application of the Transparency in Wage Structures Act in practice. In human resources management, the question of "work equivalence" is defined exclusively on the basis of requirements. This is also indirectly specified by the text of the law, as it prescribes an evaluation that is independent of the employee's performance. As such, a data-driven analysis of the requirements is required. In addition to base compensation, additional forms of compensation (e.g. year-end bonus or
company car
A company car is a vehicle which companies or organisations lease or own and which employees use for their personal and business travel. Take-home vehicle is a vehicle which can be taken home by company employees. Depending on the company, company ...
) can be included. The reference compensation is determined using the median compensation of at least five other employees of the opposite sex.
Legislative history
In the 2013
coalition agreement
A coalition government is a form of government in which political parties cooperate to form a government. The usual reason for such an arrangement is that no single party has achieved an absolute majority after an election, an atypical outcome in ...
, the
CDU,
CSU
CSU may refer to:
* Channel service unit, a Wide area network equivalent of a network interface card
* Chari Aviation Services, Chad, by ICAO airline code
* Christian Social Union (UK), an Anglican social gospel organisation
* Christian Social Un ...
, and
SPD
The Social Democratic Party of Germany (german: Sozialdemokratische Partei Deutschlands, ; SPD, ) is a centre-left social democratic political party in Germany. It is one of the major parties of contemporary Germany.
Saskia Esken has been the ...
initially agreed on a threshold of 500 employees for the individual right to information about the criteria used to determine compensation. After
Manuela Schwesig
Manuela Schwesig (' Frenzel, born 23 May 1974) is a German politician of the Social Democratic Party serving as Minister President of Mecklenburg-Vorpommern since 4 July 2017. She is the first woman to serve as head of government of this state. P ...
called for a threshold of 6 employees, the
Federal Cabinet settled on a threshold of 200 employees for the individual right to information, but used the previously agreed-upon threshold of 500 employees for employer reporting obligations.
On 30 March 2017, the
Bundestag
The Bundestag (, "Federal Diet") is the German federal parliament. It is the only federal representative body that is directly elected by the German people. It is comparable to the United States House of Representatives or the House of Commons ...
passed the bill with votes in favor from the
CDU/CSU
CDU/CSU, unofficially the Union parties (german: Unionsparteien, ) or the Union, is a centre-right Christian-democratic political alliance of two political parties in Germany: the Christian Democratic Union of Germany (CDU) and the Christian Soc ...
and SPD
grand coalition
A grand coalition is an arrangement in a multi-party parliamentary system in which the two largest political parties of opposing political ideologies unite in a coalition government. The term is most commonly used in countries where there are t ...
, while
Alliance 90/The Greens
Alliance 90/The Greens (german: Bündnis 90/Die Grünen, ), often simply referred to as the Greens ( ), is a Green politics, green List of political parties in Germany, political party in Germany. It was formed in 1993 as the merger of The Greens ...
voted against, and
The Left abstained.
Criticism
At a public hearing of the Committee on Family Affairs, the
German Trade Union Confederation
The German Trade Union Confederation (german: Deutscher Gewerkschaftsbund; DGB) is an umbrella organisation (sometimes known as a national trade union center) for eight German trade unions, in total representing more than 6 million people ...
criticized the bill for not providing for collective actions in the case of wage discrimination. The group applauded the introduction of the individual right to information, but noted that women would likely face professional retaliation for taking action alone against their employers. The also criticized the planned compensation review process for being voluntary and only applying to employers with more than 500 employees, as actions on a voluntary basis have not produced successful outcomes in the past.
The
German Green Party
Alliance 90/The Greens (german: Bündnis 90/Die Grünen, ), often simply referred to as the Greens ( ), is a green political party in Germany. It was formed in 1993 as the merger of The Greens (formed in West Germany in 1980) and Alliance 90 (fo ...
criticized the threshold values of 200/500 employees and called for the law to be applicable for all employers. They further criticized the lack of a mechanism for unions to engage in collective actions.
Die Linke
The Left (german: Die Linke; stylised as and in its logo as ), commonly referred to as the Left Party (german: Die Linkspartei, links=no ), is a democratic socialist political party in Germany. The party was founded in 2007 as the result of th ...
criticized the that the compensation reviews were not mandatory.
The
Confederation of German Employers' Associations
The Confederation of German Employers' Associations or BDA (German: ''Bundesvereinigung der Deutschen Arbeitgeberverbände'') is the umbrella organization for German employers' associations. It represents interest groups in the areas of industry, ...
criticized the law as being too bureaucratic and that the law misses its target of promoting career opportunities for women.
Alexander Hagelüken and Thomas Öchsner researched the outcomes of the law in May 2018 on behalf of the German newspaper ''
Süddeutsche Zeitung
The ''Süddeutsche Zeitung'' (; ), published in Munich, Bavaria, is one of the largest daily newspapers in Germany. The tone of SZ is mainly described as centre-left, liberal, social-liberal, progressive-liberal, and social-democrat.
History ...
''.
Companies in which pay inquiries were made directly to the employer, instead of through a
works council
A works council is a shop-floor organization representing workers that functions as a local/firm-level complement to trade unions but is independent of these at least in some countries. Works councils exist with different names in a variety of re ...
, a large number of employees did not make use of their right to information due to fear of retaliation. In general, however, the law had not seen much use.
The use of the
median
In statistics and probability theory, the median is the value separating the higher half from the lower half of a data sample, a population, or a probability distribution. For a data set, it may be thought of as "the middle" value. The basic fe ...
, along with the combination of base pay and fringe benefits as a single sum, results in a list where the employer only communicates the value in the middle of the list, which reduces the usefulness of the report.
The law only includes a subset of fringe benefits that employers might provide.
None of the 20 large companies they contacted stated that they planned any fundamental changes.
Jurisprudcence
In a decision handed down on 21 January 2021, the
Federal Labour Court
The Federal Labour Court (''Bundesarbeitsgericht'') is the court of the last resort for cases of labour law in Germany, both for individual labour law (mostly concerning contracts of employment) and collective labour law (e.g. cases concerning st ...
ruled that if a female employee is paid less than the median of male employee in a comparable role, there is a
rebuttable presumption
In common law and civil law, a rebuttable presumption (in Latin, ''praesumptio iuris tantum'') is an assumption made by a court that is taken to be true unless someone proves otherwise. For example, a defendant in a criminal case is presumed inn ...
under § 22 of the ''Allgemeines Gleichbehandlungsgesetz'' that this is due to discrimination.
Further reading
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References
External links
English translation of the lawpublished by the German government.
{{Authority control
2017 in law
Anti-discrimination law
German labour law
Pages translated from German Wikipedia
Women's rights legislation