For employers: Common misunderstandings about pay transparency

The days when salary was a closely guarded secret between employer and employee are drawing to a close. While the political debate surrounding skilled worker immigration often revolves around bureaucratic hurdles, a crucial factor in attracting highly qualified talent is frequently overlooked: fair and transparent compensation. For an international professional considering relocating to Germany, the assurance of not being discriminated against based on origin or gender is a key criterion when choosing a workplace. However, myths surround the new EU Pay Transparency Directive (Directive (EU) 2023/970) , causing uncertainty for both companies and applicants. As a law firm, we see daily how a lack of knowledge in this area can quickly lead to legal pitfalls.

The myth of the salary range in every advertisement

A common misconception is that every job posting must now include a specific salary range. This assumption often leads to frantic adjustments in HR departments. In fact, Article 5, Paragraph 1 of the Directive allows employers some flexibility . While it's true that applicants have the right to information about starting salaries before their first interview, publishing it directly in the job advertisement is just one example of how this can be implemented. Highly qualified expats seeking a visa should be aware that employers can also proactively provide this information via email or in an information sheet. The crucial point, however, is that the information must be provided before the first interview. Employers can specify either a salary range or a fixed starting salary. For us as consultants, this demonstrates that transparency during the application process is a sign of appreciation that goes beyond the purely legal requirement.

Collective bargaining agreements do not offer automatic protection against lawsuits.

We often hear from companies that they feel secure because they pay according to collective bargaining agreements. They frequently cite the German Pay Transparency Act (EntgTranspG) , which previously provided a certain presumption of fairness for collective agreements. However, the new EU directive does not recognize such a blanket privilege. Even if a collective agreement forms the basis, individual allowances or performance bonuses can lead to disadvantages that are legally contestable. This is important news for highly qualified migrants: A collective agreement alone is no guarantee of individual pay equality. If you find that your colleagues with the same qualifications and job are earning significantly more, legal action may be the way to enforce your rights. We have observed that the Federal Labor Court, with its ruling of October 23, 2025, has already significantly tightened the requirements for a fair salary comparison.

The underestimated danger: The five percent threshold

A particularly persistent misconception concerns the so-called gender pay gap . Many employers feel secure as long as the company-wide difference in pay remains below five percent. However, the directive takes a closer look: what matters is not the company-wide average, but the difference within a specific group of employees. Specifically, this means that if women in a company's IT department earn, on average, eight percent less than men, the pay review process under Article 10 of the directive is triggered – even if the overall company gap is only two percent. For talented individuals who come to Germany with a university degree , this means improved protection within their respective departments. The review takes place at the group level, which significantly increases transparency in the core areas of employment for these professionals.

The reversal of the burden of proof: A sharp sword in the legal process

In legal practice, the burden of proof is often crucial to the outcome of a case. It is a misconception to believe that the burden of proof in salary disputes now always and automatically lies with the employer. Employees must still credibly demonstrate facts that suggest discrimination . Only then does the burden shift. However—and this is the crucial point in practice—if the employer has violated their transparency obligations (for example, by failing to provide information about salary structures), a stricter burden of proof applies. In such a court, the employer must then provide conclusive proof that no discrimination occurred. This significantly strengthens the position of employees who may feel insecure due to their origin or gender. Anyone with a residence permit who works in Germany has the same right to this transparency as any other employee.

Conclusion: Transparency as a right and an opportunity

Implementing the Pay Transparency Directive is not merely a bureaucratic burden, but a necessary step towards a fair labor market that remains attractive to international talent. The identified misconceptions demonstrate that one cannot rely on outdated information or superficial summaries. For both employers and employees, only those who know and apply the precise wording of the directive are legally secure. The digitalization of migration administration and modern legislation must go hand in hand to effectively combat discrimination. Fair wages are the foundation for successful integration and a stable life in Germany, including security for one's family .

How our law firm can help you

As a specialized law firm for visa and employment law, the Visaguard team supports you in understanding and enforcing your rights in the German labor market. Whether it's reviewing your employment contract regarding pay transparency or representing you in court proceedings concerning wage discrimination – we are by your side. We not only help you ensure your passport receives the correct stamps, but also that your qualifications are fairly compensated in Germany. If you have any questions about your visa or your right to equal pay, schedule a consultation with us today.