EU Pay Transparency Rules Take Effect as German Labor Reform Debate Intensifies
14.06.2026 - 06:42:20 | boerse-global.de
New obligations for German employers took effect in mid-June, with the European Union’s pay transparency directive and updated works council regulations landing amid heated disputes over collective bargaining and working-time flexibility.
Under the EU directive, companies must now inform job applicants of the expected starting salary before the interview. Employers are also prohibited from asking about previous compensation. Businesses with more than 100 employees are required to report gender pay gaps on a regular basis. If the gap exceeds five percent, a joint pay assessment with the employee representation body becomes mandatory. In any dispute over equal pay, the burden of proof now rests with the employer.
The changes come as the German government’s push to reform the Working Hours Act triggers sharp conflict. The proposed law would replace the daily 8?hour limit with a weekly maximum of 48 hours, giving firms more flexibility. Employer associations hail this as a boost to competitiveness, but DGB chairwoman Yasmin Fahimi warns it could undermine worker protections. A reform summit at the Federal Chancellery revealed deep divisions: unions demand a right to full-time employment and an end to fixed-term contracts without cause, while employers call for cutting social security contributions below 40 percent and linking the retirement age to life expectancy.
Works Council Powers and the EU Inc. Threat
The updated works council regulations clarify the role of employee representatives. A council can be formed in companies with at least five eligible voters. Thresholds for board-level co?determination remain unchanged: the One?Third Participation Act applies from 500 employees, the Co?Determination Act from 2,000.
The Hans?Böckler?Foundation has warned that the planned EU legal form “EU Inc.” could allow companies to circumvent co?determination by choosing their registered seat. Daniel Hay, director of the foundation’s Institute for Co?Determination and Corporate Governance, argues that the legal seat must be tied to the operational headquarters, and that the new form should be limited to firms with fewer than 500 employees.
Collective Bargaining: The 80 Percent Target Falters
While the DGB aims for an 80 percent collective bargaining coverage rate, the current figure stands at roughly 49 percent. The Education and Science Union (GEW) on June 12 pointed to major gaps in the Federal Collective Bargaining Compliance Act (BTTG), which took effect on May 1, 2026. The law requires companies receiving federal contracts worth €50,000 or more to adhere to collective bargaining agreements. Yet the GEW notes that key areas are exempt, including training measures run by the Federal Employment Agency, language courses offered by the Federal Office for Migration and Refugees, and non?university research with over 100,000 positions. The union demands that collective bargaining become a general condition for public funding.
In a positive note, the Construction and Wood Union (GBH) reported that about 250,000 workers will receive an average 3.5 percent wage increase from the spring pay round. Skilled workers in the construction industry can expect an annual gain of roughly €1,690.
Pension Hike and Health?Care Criticism
The Bundesrat approved a 4.24 percent pension increase on June 12, to take effect in July. Saarland’s Health Minister Magnus Jung, however, criticized the planned health?insurance reform, arguing that the proposed elimination of full reimbursement for tariff increases sends a negative signal to nursing staff.
