In a bid to tackle the gender pay gap, the law states that workers in companies with more than 200 employees (around 14 million people in Germany) have the right to know what men and women in equal positions are earning.
Businesses with more than 500 staff members will also have to publish regular updates on salary structures to show they are complying with equal pay rules.
The income gap between men and women for similar jobs currently stands at an average of 21 percent, according to the Federal Statistical Office (Destatis).
But under the Wage Transparency Act, which has been in force since early July and is set to be in full force by Saturday, the reduction of existing wage gaps will be a top priority.
With the right to information, employees will have the chance to know whether they are being paid fairly, former Minister of Women’s Affairs Manuela Schwesig said in the Bundestag (German parliament) a few months ago.
She had also hailed the law on salary transparency as “a real breakthrough” that would help millions of women narrow the pay gap.
Germany has one of the widest pay gaps in Europe; the European average was about 16 percent in 2015, according to Eurostat.
“The main reasons (for the gender gap) were differences in the branches of activity and the occupations of women and men as well as unevenly distributed leadership and qualification-related job requirements,” Destatis wrote in the most recent report.
“In addition, more women than men work part-time or are marginally employed.”
But critics have argued that the new regulations will foster workplace animosity and create unnecessary red tape.
Christian von Stetten, a lawmaker from Merkel's Christian Democratic Union (CDU) party, said last year that some 4,000 companies would be burdened with additional bureaucracy because of the law.
“The right to demand salary information will foster workplace envy and discontent,” he told Die Welt daily.
Moreover, Expert Market found in a report sent to The Local that Germany will not be able to close its pay gap until 2046, coming in 21st place in a ranking of 26 countries.
“Although it is troubling to see the gender pay gap persisting in the EU, it is encouraging to see several potential closure dates in the near future,” said Michael Horrocks from Expert Market in a statement.
“This research indicates that the traditional European powers – UK, France and Germany – could be doing more to help close the gender pay gap.”