Pay Transparency Act – Taking Germany A Step Closer To Fulfilling The Dream Of Equal Pay

There is no denying the fact that the position of women with respect to freedom of career has improved significantly over the past several decades. However, despite these advances, most working women still have to face the problem of getting lesser pay as compared to their male counterparts. Contrary to the general belief, this problem is prevalent not only in developing nations, but even in developed countries. However, over the past several years there has been a growing demand for equal rights for both men and women at workplace with special focus on pay equality for same or equivalent work. In this context, Germany is one of the few countries known to have taken the concrete steps in the direction of ensuring pay equality.

All the above provisions will require the employers to invest their time and resources to ensure quality of men and women at the workplaces. To ensure timely provision of information in an accurate manner and to minimize the expected bureaucratic burdens, it is advisable for the employers to have standardized procedures in place supported by model documents. It is also important to understand that there are some exceptions to the above provisions, which need to be handled in a special manner. However, the overall affect of the Act is to ensure greater equality within workplaces.

Pay Transparency Act

As any professional payroll company Germany will inform its clients, the Pay Transparency Act, which was implemented by the German government in 2017, has been one of biggest step in the direction of ensuring pay equality. This is because the Act not only aims to reveal the differences between the pays of men and women but also goes a step further to work towards removing these inequalities. The finer aspects of this Act are discussed in brief as follows.

The most important aspect of the Act is that it clearly defines same and equivalent work. It states that men and women are said to do the same work if they carry perform identical or equivalent activities at same or different places of work. The Act makes it quite clear that the activities of men and women employees in question are based on the various factors. These factors include the kind of work, training requirements, terms and conditions of work, etc. The actual male and female workers themselves are irrelevant in this context.

The Act also focuses on an individual’s right to information. However, this is privilege enjoyed only by the workers of business organizations with more than 200 employees. This makes it possible for the employees to seek information about the criteria and procedures that determine their own pay as well as comparable pay calculations. This information is normally provided by the works council in the absence of which the information can be sought directly from the employer.

It is also the responsibility of the payroll service provider Germany to inform its client that if they are employing more than 500 workers, then the ACT makes it mandatory for them to voluntarily perform company audits. The audit should focus on ensuring that their payroll procedure follows the principles se out by the law and that the rules about pay and different components of pay as well as their application meet the terms of equal-pay requirement.

The companies that are affected by the Pay Transparency Act are obliged to present a management report under the German Commercial Code. They are also expected to draw up a report on equality of treatment and equal pay. In addition, the companies need to set out measures for promoting equality between men and women as well as the impact of these measures on ensuring creation of equal pay for men and women.