Germany’s Federal Labor Court Boosts Enforcement of Equal Pay

2 minute read | January.29.2021

Germany is not exactly known to be a pioneer when it comes to equal pay. In Germany, the pay gap remains particularly large and is only closing slowly, according to the Federal Statistical Office. The Federal Labor Court now took a step ahead to strengthen women's rights in its latest ruling which will enable women to enforce their rights and simplify proceedings in equal-pay cases by putting the burden of proof on employers.

What Happened?

A request to her employer by a female executive in the position of the head of department helped her to find out that the average salary of comparable male executives at the company was eight per cent higher than the salary of the female peers.

Her request was based on the Pay Transparency Act (Entgelttransparenzgesetz) which was implemented by the German parliament in 2017 targeting unequal pay of men and women and aiming to close the gender pay gap. According to this still fairly new law, in operations with more than 200 employees, employees are entitled to be informed by the employer about the salary of co-workers in similar positions. Specifically, employees may require in-scope employers to calculate the median pay from a comparable group of at least six similarly qualified colleagues of the other gender. The law explicitly states that in case of identical or similar work, direct or indirect discrimination on grounds of gender is prohibited with regard to all pay components and pay conditions.

The plaintiff sued for payment of the difference between her salary and the higher median salary of her male colleagues – without success in the first two instances. The Regional Labor Court of Lower Saxony rejected her claim arguing that she did not succeed in proving that the lower salary was a discriminatory action by the employer.

Federal Labor Court Puts Burden of Proof on Employer

The Federal Labor Court now set aside the judgement with a reversal of the burden of proof and said that the fact that her salary is lower than the salaries of her male colleagues in the same position was an indicator of gender discrimination. Consequently, it was up to the employer to challenge this presumption and prove that the difference in pay is not based on gender discrimination.

It is now the employer's turn to prove – back before the Regional Labor Court – that the pay gap is based on other reasons than gender, such as training and experience.

This ruling will make it much easier for women to enforce equal pay. The ruling may well encourage women to file a request with their employer in order to find out whether a pay gap exists and, if necessary, to enforce equal pay. The ruling also puts pressure on companies to review and change their salary structures to meet the statutory requirements.