Germany: Female Employee is Entitled to Higher Pay in Line with the Male Comparison Group

An established difference in pay between a female employee and her male peer group is an indication of a violation of the principle of equal pay. If the employer wishes to rebut this presumption, he must provide full proof that only reasons other than gender have led to the less favourable treatment of the female employee.

Background

The plaintiff, who is an employee of the defendant company, claimed an increase in her remuneration for 2021 under the German Remuneration Transparency Act. In the present case, it was undisputed that the plaintiff’s base salary and the phantom shares she had been granted were less than the median of her male peer group. The plaintiff successfully claimed an increase in remuneration in two court instances, as the employer failed to prove that the delta in remuneration was not based on gender.

Key Issues

According to Section 3 (1) of the Remuneration Transparency Act, direct or indirect discrimination on the grounds of gender is prohibited with regard to all pay components and pay conditions for equal or equivalent work. This prohibition is also laid down in Section 7 of the Remuneration Transparency Act, which states that, for the same or equivalent work, remuneration may not be agreed upon or paid on the grounds of the employee’s sex that is lower than that paid to an employee of the opposite sex.

The difference in remuneration found here is an indication of a violation of the principle of equal pay. If the employer wishes to rebut this presumption, he must provide full proof that only reasons other than gender have led to the less favourable treatment of the employee in question. The employer had the procedural burden of showing and, if necessary, proving that there was no breach of the principle of equal pay.

In the case at hand, the employer argued that the plaintiff’s male colleagues had been employed by the company for slightly longer on average and that the plaintiff had “performed” below average. However, it was not clear from the information provided by the employer how it assessed the criteria “professional experience,” “length of service,” and “quality of work” in detail and how these criteria relate to each other. The court, thus, found that the employer had not presented any facts that would have enabled the courts to effectively monitor and review compliance with the principle of equal pay.

 

Practical Point

• Permissible reasons for differentiation in remuneration would have been, for example, gender-independent differentiation according to professional experience, seniority, or quality of work.
• The differentiation criteria applied must be sufficiently specific to allow for effective monitoring and review of compliance by the court.