Five per cent appears twice in the Pay Transparency Directive. The second one has no six-month grace period and can cost you a public contract.

Most compliance planning for the EU Pay Transparency Directive treats five per cent as a single number with a single consequence: exceed it in a category of workers, and you owe a joint pay assessment. That is Article 10, and it is the version that appears in nearly every employer briefing.

There is a second five per cent. Article 24(2) allows a contracting authority to exclude an economic operator from a public procurement procedure where it can demonstrate either a breach of pay transparency obligations or a pay gap of more than five per cent in a category of workers that the employer cannot justify on objective, gender-neutral grounds.

For a company with public-sector revenue, the second is the more immediate commercial risk, for three reasons. It is decided by a buyer rather than by a compliance authority. It is not attached to a headcount band. And it does not come with the six-month correction window that softens Article 10.

The two provisions look alike and behave differently

Article 10(1) is a three-part test, and all three conditions have to be met before a joint pay assessment is owed. There must be a difference of at least five per cent in the average pay level in a category of workers performing equal work or work of equal value. That difference must not be justified on objective, gender-neutral criteria. And it must not have been remedied within six months of the date of reporting.

Five per cent on its own is therefore not a breach. It is the first of three gates, and the third gate is a deadline that the employer controls.

Article 24(2) sets a shorter test. There has to be a pay gap of more than five per cent in a category of workers, and it has to be one the employer cannot justify on objective, gender-neutral criteria. There is no third condition. The correction window that exists in Article 10(1)(c) is simply absent from the procurement provision.

The thresholds are also not phrased identically. Article 10(1)(a) refers to a difference of at least five per cent. Article 24(2) refers to a gap of more than five per cent. In practice this only matters at exactly 5.0 per cent, but it is a reminder that the two provisions are not copies of each other.

Article 24 reaches below the reporting thresholds

The reporting duty in Article 9 is banded. Employers with 250 or more workers report annually from 7 June 2027. Employers with 150 to 249 workers report every three years, also from 7 June 2027. Employers with 100 to 149 workers report every three years from 7 June 2031. Below 100 workers there is no EU reporting duty, although Member States may create one.

Article 24 sits outside that structure. It states no headcount threshold, and the obligations it refers back to include those that apply regardless of size: the pre-employment transparency rules in Article 5, the pay-setting criteria in Article 6, and the individual right to pay information in Article 7.

The practical consequence for a supplier with 120 employees is uncomfortable. It has no EU reporting duty until 2031. It still has Article 5, 6 and 7 duties from the moment its Member State transposes. And a contracting authority can still, in principle, exclude it over a category-level gap it was never required to publish.

Germany has the machinery. What it does not yet have is the duty.

Germany missed the 7 June 2026 transposition deadline and has still not published a Referentenentwurf, the ministerial draft that precedes a bill. As of late July 2026, law firm trackers reported that only Italy, Lithuania, Malta, and Slovakia had completed transposition. No German contracting authority can therefore exclude a bidder for breaching the Directive today, because the Directive is not yet German law.

The procurement mechanism, however, is already in place, and it was not built for this purpose.

Section 128(1) of the Gesetz gegen Wettbewerbsbeschränkungen (GWB) requires companies performing a public contract to comply with all applicable legal obligations, and among the obligations it names explicitly are tax, levies, and social security contributions, occupational health and safety rules, the legal requirements on gender equality in relation to equal pay, and statutory minimum working conditions. Equal pay is therefore already a contract performance obligation in German procurement law, not a policy aspiration.

Section 124(1) no. 1 GWB then supplies the consequence. A contracting authority may exclude a company from a procurement procedure, subject to the principle of proportionality, where the company has demonstrably breached applicable environmental, social or labour law obligations in the performance of public contracts.

Read together, the chain is short. Section 128(1) makes equal pay an obligation during performance. Section 124(1) no. 1 makes a demonstrated breach of such an obligation during performance a discretionary exclusion ground for the next tender. Whatever Germany writes when it transposes the Directive, this route exists now.

One limit is worth stating precisely. Section 124(1) no. 1 is drafted around breaches committed in the performance of public contracts, which is narrower than Article 24(2), where the trigger is a demonstrated infringement of equal pay obligations as such. How Germany closes that difference is one of the more consequential drafting choices still ahead.

The number that can exclude you is not the number that becomes public

Article 24(2) turns on a gap in a category of workers. Only one of the seven reporting metrics in Article 9(1) is calculated per category of workers, and that is point (g).

Point (g) is also the metric with the most restricted publication route. Under Article 9(7) all seven metrics go to the monitoring body, but only points (a) to (f) may be published, and those are company-wide figures. Under Article 9(9), point (g) goes to every worker and to their representatives, along with the four preceding years on request. It does not enter the public dataset that the monitoring body compiles and publishes under Article 29.

This produces an asymmetry worth planning around. The figures that will be publicly comparable across employers, sectors, and regions are the company-wide ones. The figure that decides whether a five per cent exclusion ground exists is held by the employer, by the monitoring body, by every one of the employer's own workers, and by their representatives.

A contracting authority is therefore unlikely to find the relevant number in a public database. It is more likely to encounter it through the tender file itself, through a self-declaration that later turns out to have been inaccurate, or through a dispute in which the evidence access rules in Article 20 apply.

What to settle before your next tender

The sequence matters, because a self-declaration you cannot support is a worse position than a gap you have documented.

1. Establish how much of your revenue is public. Contracts, frameworks, and concessions, including subcontracted work under a public prime. This determines whether Article 24 is a live commercial question for you or a background one.
2. Group your workforce by work of equal value, on the Article 4(4) criteria, before you calculate anything. Both Article 10 and Article 24(2) operate on categories of workers, not on the company-wide figure. A company-wide gap of two per cent tells you nothing about whether a category exceeds five.
3. Calculate the per-category gap on total pay. Pay under Article 3(1)(a) is the basic wage plus all complementary and variable components. A category gap computed on base salary alone is not the figure either article is about.
4. Write down the justification for every category above five per cent at the time you find it. Article 24(2) asks whether the gap can be justified on objective, gender-neutral criteria. A justification reconstructed during a tender is worth less than one recorded when the analysis was run.
5. Read your existing tender self-declarations against what you can actually evidence. Most German bidders already sign a declaration covering social and labour law compliance in the performance of public contracts, and section 128(1) GWB already names equal pay among those obligations.
6. Do not rely on the six-month window. It belongs to Article 10(1)(c) and to nothing else. A gap that is still inside its remedy period is nonetheless an unjustified gap for the purposes of Article 24(2).
7. Track your Member State's transposition of Article 24 specifically. Article 24(2) is addressed to Member States rather than being self-executing. Whether your buyers may exclude on this ground, and on what evidence, is a national decision, and it will not be uniform across the EU.

None of this requires waiting for the German draft law. Grouping the workforce by work of equal value, calculating a per-category gap on total pay, and documenting the justification are the same three steps that Article 9 reporting will require in any case. Doing them before a tender rather than after one changes which conversation you are having.

Article 24 is the provision that turns pay transparency from a reporting obligation into a commercial qualification. For an employer with no public-sector revenue it is a footnote. For a Mittelstand supplier in construction, facility services, IT, logistics, or consulting, where public contracts are often the most reliable part of the order book, it is the article most likely to be quoted back at them first.