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Germany's pay landscape is tightening quickly. With the EU Pay Transparency Directive due to be implemented by June 7, 2026, and German case law and legislation already reshaping exposure, now is the time to stress test your pay architecture.
The Federal Labor Court's October 23, 2025 decision materially elevates risk. Previously, the median pay of the other sex served as the benchmark for prima facie evidence of discriminatory pay. Under the new approach, a single higher paid comparator of the other sex may suffice to establish a presumption of discrimination. In practice, this can trigger an alignment obligation to the higher comparator's salary unless the employer can convincingly rebut that presumption. The risk is particularly acute in variable pay structures, where comparators and performance rationales are often less standardized.
In parallel, the proposed Federal Tariff Compliance Act would tie eligibility for federal contracts from EUR 50,000 to tariff level conditions, introduce principal contractor wage liability, and impose sanctions up to 10% and tender exclusion for repeat violations.
These developments interact: transparency driven comparator claims and procurement linked obligations require robust documentation, defensible pay criteria, and consistent application.
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