Equal pay for equal work

Issue

A legal action was brought by a female sales representative who took up her job with a monthly basic salary of €3,500 (gross). This salary had also been offered to a male colleague in the same field of activity who had been hired two months earlier; however, he had rejected this offer. Instead, a basic salary of €4,500 had been agreed for a transitional period. Subsequently, new collective bargaining rules came into effect whereby the sales representatives concerned were then each entitled to the same basic salary. However, the claimant sued for the difference in the remuneration of €1,000 monthly also for the period before that as well as for payment of appropriate compensation for the discrimination that occurred on the grounds of gender.  

Decision

After the lower courts had still rejected the request, the BAG then ruled in favour of the claimant, in its ruling of 16.2.2023 (case reference: 8 AZR 450/21). According to this, the entitlement arises directly from the German Pay Transparency Act (Section 3(1), Section 7). This states that lower remuneration may not be agreed or paid for the same or equivalent work on the grounds of gender.

In this respect, what is notable is that the judges already allowed a comparison with one single better paid male employee to be an adequate indication of gender-based pay discrimination. It was thus up to the employer to rebut this presumption. He failed to do so. In particular, the court did not accept the man’s supposed negotiating skills as justification for the unequal treatment.

Therefore, the claimant was awarded back pay and also compensation for gender discrimination under the German General Equal Treatment Act. However, at €2,000 this was considerably lower than what had been requested (€6,000). 

Outlook

While the implications of this ruling for the workplace and future salary negotiations cannot yet even be assessed, nevertheless, they will be considerable. The principle of freedom of contract that applies to employment outside the collectively agreed pay scale will increasingly come into conflict here with potential discrimination risks.

In future, the question of when the same or equivalent work is performed and the criteria that have to be applied here will likewise grow in importance.

Please note: Since 2018, under the German Pay Transparency Act, employees have had the right to information vis-à-vis their employers. If a business normally has more than 200 employees and at least six members of staff of the other gender perform the same or equivalent work then, upon request, information has to be provided about the average gross monthly remuneration and up to two other remuneration components.