Pay Gap Compliance - what employers need to do now

All companies are affected by the new regulation, regardless of size or sector. The reporting obligations are, however, staggered:

• ≥ 250 employees: annual pay report
• 150-249 employees: every three years, for the first time from 7 June 2027
• 100-149 employees: every three years, for the first time from 7 June 2031
• < 100 employees: no mandatory reports, but basic transparency and equal treatment rules apply

Obligations of the companies

Companies must, among other things:

• record data on pay in a comprehensive and systematic manner
• form comparison groups based on the criteria in the Directive
• examine pay differences and derive measures
• involve HR, managers and employee representatives
• create reports and ensure employees' rights to information
• carry out a so-called "joint pay assessment" with employee representatives if there are differences ≥ 5 %
• adapt application procedures (e.g. disclose salary ranges, no questions about previous remuneration)

Violations can result in claims for damages, additional payments and fines. The burden of proof lies with the employer.

Challenges for companies

Implementing the requirements is complex and time-consuming. Forming comparison groups is particularly critical. To prove that equal work or work of equal value is paid equally, companies must take the four central criteria of the Directive into account when assessing work: job requirements, effort, responsibility and working conditions. Any errors in the assessment or documentation can result in legal risks, fines and can damage the company's reputation. In addition, the shift in the burden of proof in the event of discrimination and new reporting obligations suddenly make pay systems relevant to liability.

Equal pay for equal work may sound simple, but putting it into practice is complex. It is crucial to form comparison groups correctly, apply objective criteria and document decisions in a comprehensible manner. Companies need pragmatic solutions to master the bureaucratic burden and avoid liability risks.

Above all, companies should think strategically. It is not enough to tackle existing shortcomings selectively – fair pay must be organised systematically and pragmatically. Only those who act proactively remain capable of acting.

CMS Pay Gap Compliance – pragmatic solution

CMS has developed the tool "CMS Pay Gap Compliance" to offer companies a practical solution for complying with the EU Pay Transparency Directive. The platform makes it possible to create a central database by bringing together personnel and salary information from various sources. On this basis, comparison groups can be formed according to the criteria of the Directive.

The assessment logic can be flexibly adapted to company requirements and the specifications of the Directive. It analyses gender-specific pay differences within each comparison group, provides recommendations for action and simulates scenarios so that adjustments can be examined in advance.

The platform also provides automated reporting for employees, the works council and supervisory authorities. This enables companies to meet the requirements of the Directive in a transparent, comprehensible and legally compliant manner, while significantly reducing the bureaucratic burden.