February 20, 2018

The secrecy surrounding salaries is crumbling

Since January 2018, German employers must give their employees information about their colleagues’ salaries. However, the Remuneration Transparency Act does not guarantee full transparency.

What does the lazybones in the office next door earn? Does he get more money because he’s a man? Depending on the statistical method used, the gap between women’s and men’s salaries in Germany is between 6 and 21 percent. What men like to dismiss as an “envy debate” is now on the legislature’s agenda. The “Remuneration Transparency Act” should help reduce the gender gap.

An act with restrictions

From now on, employees can request information regarding their colleague’s salaries. However, the colleague next door’s exact salary will remain secret in order to keep the peace at work. Employers do not have to reveal individual salaries. They only have to reveal the median remuneration of a group of at least six colleagues of the other sex who do the same or an equivalent job as the person requesting the information. “Remuneration” here refers to an employee’s salary plus bonuses and non-cash benefits such as company cars.

The fact that transparency regarding remuneration will only extend as far as a median figure is not the only restriction. Only companies with more than 200 employees are required to provide this information. Companies that employ more than 500 people must also establish a company checking and reporting system in order to ensure just remuneration structures which are fair to both genders.

Controversial benefits

Critics doubt that the act will be effective. It will be particularly difficult for specialist employees to obtain information. After all, employers can refuse on the grounds that there are no six employees with equivalent jobs. And if a median can be calculated, this does not give grounds for a pay rise for those who are paid below-average salaries. According to the Federal Government’s guide, the findings alone “do not prove remuneration discrimination”.