Current ruling by the Federal Labor Court on equal pay for men and women

In a recent judgment (judgment of 16.02.2023 - Ref.: 8 AZR 450/21), the Federal Labour Court (BAG) upheld a claim by a female employee demanding the same remuneration as her male colleagues. According to the BAG, the employer could not rebut the presumption of discrimination on the grounds of gender, in particular on the grounds that the male colleague had negotiated a better salary when he was hired.

According to Section 7 EntgTranspG, in the case of employment relationships for equal or equivalent work, no differentiation may be made in the level of pay on the basis of the employee's gender. If employees of one gender are paid more than employees of the other gender, it is presumed under Section 22 AGG that the difference in pay is due to discrimination based on gender. The employer can only rebut this presumption if it can prove that the difference in pay is justified by objective reasons. If he is unable to do so, the employees of the disadvantaged gender are entitled to equal pay (so-called equal pay principle).

In the case to be decided by the BAG, the employer relied primarily on the fact that the male colleague was offered the same remuneration conditions as the female employee who brought the action. However, the male colleague, in contrast to the plaintiff employee, had rejected this offer and declared a higher basic salary as a condition of his employment. The employer had complied with this demand as it was dependent on recruiting the employee.

After the courts of first instance had ruled in favor of the employer on the grounds that the difference in the agreed salary was justified by the employer's legitimate interest in recruiting employees, the BAG now ruled that the employer could not rely on the fact that the male employee had negotiated a better salary. The presumption of discrimination on the grounds of gender was not rebutted.

So far, however, only a press release on the BAG's decision is available, from which it is unfortunately not clear exactly why the BAG came to a different conclusion than the courts of first instance. It therefore remains to be seen whether negotiating a better salary or paying a higher salary to attract employees is per se unsuitable to rebut the presumption of gender discrimination, or whether there may be exceptional cases in this regard, for example if it is otherwise not possible to fill a position in the foreseeable future.

In any case, employers should think carefully in future when negotiating salaries with applicants or employees as to whether they should give in to demands that go beyond the previous remuneration structure. In any case, this should be avoided if it results in employees of one gender earning significantly less than comparable employees of the other gender.

Otherwise, it could be expensive for the employer in the event of a dispute. In the case decided by the BAG, the employer was not only ordered to pay differential remuneration totaling EUR 14,500 gross, but also to pay compensation of EUR 2,000 due to discrimination on the grounds of gender.

Date: 28. Feb 2023