international employment law firm alliance L&E Global

Germany: “Negotiation skills” do not justify deviating remuneration of men and women in comparable positions

At the beginning of the employment in question, a female employee agreed on a base remuneration in the amount of 3,500 € with her employer. A male employee in the same position who started three month before her did not agree to this salary amount but demanded a base remuneration in the amount of 4,500 €. After paying both employees a base remuneration in the amount of 3,500 € for a while, the employer later amended the remuneration of the male employee first to 4,000 € and then to 4,120 € while the remuneration of the female employee remained the same.

The Federal Labour Court found that by paying female and male employees a deviating remuneration for the same or equal work, the employer discriminated against the female employee based on her gender. This results in an equalization claim, i.e. the female employee was entitled to the delta between her remuneration and the remuneration of her male colleague. In addition, she was entitled to a compensation for the discrimination.

Paying a lower base remuneration to a female employee compared to a male colleague performing the same or comparable work indicates a discrimination based on gender pursuant to Section 22 of the German General Act on Equal Treatment (AGG). As a consequence, the burden of proof switches to the employer, who has to prove that no discrimination took place.

In the present case the employer was not able to provide a valid reason for the differentiation in remuneration. In particular, the negotiation skills of the male employee were not considered a valid justification by the court. Therefore, the indication of a discrimination could not be refuted by the employer.

Practical Point

  • The decision fits in with the increasing demand for transparency in order to fight gender pay gaps and to enable an assessment of the market value remuneration. In combination with the Remuneration Transparency Act (EntgTranspG), employers have to be prepared for an increasing number of claims from employees relating to gender pay gaps.
  • In accordance with this the EU-commission has proposed a directive in 2021 to strengthen the principle of equal pay for equal work or work of equal value. The directive aims to combat wage discrimination and reduce the gender pay gap, especially through remuneration transparency and special enforcement mechanisms. Formal adoption is expected this quarter. After its adoption, member states have two years to implement the directive in national law.