Germany: Female Manager Receives Higher Pay Due to Unequal Treatment Compared to Male Colleagues

The plaintiff, a female manager, worked at the third level of management in a company. Her salary was below the median salary of both the female and male peer groups. The plaintiff demanded the difference between her salary and that of the male colleague she named, or the difference between her salary and that of the highest paid person in the world at that level of management. Alternatively, she demanded an adjustment to the median salary of the male peer group.

Her claim was based on the German Transparency in Wage Structures Act and the principle of equal treatment. In particular, Section 3 (1) of the Transparency in Wage Structures Act prohibits direct or indirect discrimination on grounds of gender with regard to pay. Section 7 of the Transparency in Wage Structures Act also clarifies that there shall be no pay discrimination based on gender for the same or equivalent work. These provisions are based on Article 157 of the Treaty on the Functioning of the European Union, which also requires equal treatment of women and men in working life.

 

Key Issues

The Regional Labour Court of Düsseldorf ruled in favour of the manager for part of the amount claimed. However, the court also found that the evidence was only sufficient to prove gender discrimination to the extent of the difference between the median male and female salaries. In the case of gender pay discrimination, not just any evidence will suffice to support a claim for the maximum conceivable difference between the salary of a male and a female employee. Rather, there must be evidence of gender discrimination in a very specific amount.

In this case, it was clear that the salary of the male colleague used for comparison was above the median salary of the male comparison group and that the plaintiff’s salary was below the median salary of the female comparison group. The court held that it could not be presumed that the entire difference between individual salaries was due to gender discrimination.

According to the court, the plaintiff could also not base a claim for adjustment “to the top”, i.e. to the highest salary paid on her level worldwide, on the principle of equal treatment in employment law. The court found this adjustment claim refers to the average value when there is a differentiation within the favoured group (here the group of male employees).

The Court allowed the appeal to the Federal Labour Court due to the fundamental importance of the matter.

Practical Point

• The decision emphasises that mere unequal treatment does not automatically give rise to a right to the highest possible pay adjustment. Rather, detailed and specific evidence of direct or indirect discrimination must be provided if the claimed difference shall exceed the median pay of the comparison group.
• Nonetheless, companies should be aware of the risk that unequal treatment within the pay structure could lead to litigation and should review their pay models for transparency and equal treatment to mitigate this risk.