Germany: Suspected Discrimination due to Pay Gap between Male and Female Employees
According to a recent ruling of the German Federal Labor Court, the fact that the remuneration of a female employee is lower than the median remuneration of male employees for the same work justifies the assumption that an unfavorable treatment in terms of remuneration has occurred because of gender. It is then up to the employer to refute this assumption.
In the case before the court, a female department leader first claimed information regarding the remuneration paid to comparable male employees and then sued her employer for higher pay. Under certain prerequisites, the Remuneration Transparency Act allows employees to request information from their employer on the median remuneration paid to a comparable group of employees of the other sex. The aim of this relatively new law, that came into force in July 2017, is to reduce remuneration inequalities for comparable work between the sexes.
In the case at hand, the plaintiff requested and received information from the employer pursuant to the Remuneration Transparency Act on the comparative remuneration of male department leaders. The comparative remuneration stated by the employer was higher than the plaintiff’s remuneration in terms of both fixed salary and additional allowances. Therefore, the female department leader sued for payment of the gap between her remuneration and the comparative remuneration median stated by the employer.
After the regional labor court dismissed the action, this ruling has now been overturned and the case has been referred back to the regional labor court for further clarification of the facts. Pursuant to the Federal Labor Court, the fact alone that the female employee received less remuneration than the median remuneration of the male comparison group justifies the assumption that the female employee was subject to pay disadvantage because of her gender. The employer can still refute this assumption, however the burden of proof that no discrimination occurred despite the lower remuneration is now on the employer. As the regional labor court had not established the relevant facts yet with regard to a potential rebuttal of the assumption of gender discrimination, the Federal Labor Court referred the case back.
While the ruling of the Federal Labor Court may seem reasonable in light of the purpose of the Remuneration Transparency Act, it considerably shifts the burden of proof to the disadvantage of the employer. While the regional labor court had considered it necessary for the female employee to present additional facts indicating a discrimination, the Federal Labor Court found it sufficient that the employee showed that her remuneration was below the median remuneration of the male comparison group. However, looking only at these numbers often only gives a very limited picture of the remuneration system. For example, the female employee’s remuneration is only compared against the remuneration of her male colleagues, but not against the remuneration of other female colleagues. It is not taken into account whether the female employee has a shorter tenure or less experience in the current position or whether there are other non-discriminatory factors that led to a lower remuneration. Of course, the employer can still present those facts in a court proceeding, but due to the shift in the burden of proof that is already triggered when the claiming employee’s remuneration is lower than the median remuneration of the other sex, the employer is under higher pressure and risk of losing the case. There a no guidelines yet from case law as to what facts the employer has to be able to present in order to successfully refute the assumption of discrimination.
For more information on these articles or any other issues involving labour and employment matters in Germany, please contact Dr. Tobias Pusch (Partner) of Pusch Wahlig Workplace Law at pusch@pwwl.de or visit www.pwwl.de.
