Equal pay

The principle of equal pay cannot be waived just because a male colleague demands a higher salary and the employer gives in. The German Federal Labour Court (Bundesarbeitsgericht – BAG) clarified this on Thursday and ruled in favour of a woman who had sued for payment of the difference to her male colleague’s salary and for damages (judgement of 16 January 2023, case no. 8 AZR 450/21). The eighth BAG senate awarded the Dresden woman back pay of 14,500 euros and compensation of 2,000 euros.

The plaintiff, Susanne Dumas, had been employed as a sales employee at a metal company in Meißen near Dresden since 1 March 2017. The basic salary agreed in her individual contract was 3,500 euros gross. Two male colleagues were also employed by the company, one of them since 1 January 2017. He was also initially offered 3,500 euros, which he rejected. Instead, a higher basic salary of 4,500 euros was agreed. After a year, the salaries of the man who had been hired at a similar time to Dumas were equalised – until, after a few more months, both men were again offered a higher salary. However, the second man had been with the company for 30 years, making it difficult to settle the case in court.

Dumas initially sued unsuccessfully for the difference in salary to the male colleague who had been hired at the same time as her. However, both the Dresden Labour Court and the Saxony Regional Labour Court ruled that the unequal pay was justified. The man had only agreed to take the job at the higher salary. The company’s interest in recruiting staff justified the difference in salary, and recruiting staff was an objective criterion.

GFF: Ruling a “milestone
However, Dumas’ appeal to the BAG was successful. According to the BAG, she had been discriminated against on the basis of her sex because she had been paid a lower basic salary for doing the same work. She was therefore entitled to the same basic salary as her male colleague with whom she could compare herself.

The lower salary for the same work gave rise to a presumption of discrimination on grounds of sex under Section 22 of the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz – AGG). According to the BAG, the defendant company failed to rebut this presumption. The company could not successfully argue that the higher basic salary of the male colleague was not due to his gender but to his better negotiating skills.

Dumas’ case was supported by the Society for Freedom Rights (GFF). “This ruling is a milestone on the road to equal pay for women and men. Equal pay cannot be negotiated away – this clarification was long overdue,” said Sarah Lincoln, GFF’s litigation coordinator. In practice, this means that employers can meet the pay demands of an employee or applicant. However, they would then have to increase the pay of an equally qualified and experienced employee, the GFF said in a statement.

Negotiating skills no longer an objective criterion
The prohibition of discrimination on the grounds of gender, and thus equal pay, is regulated by the AGG, the German Pay Transparency Act (EntgTranspG) and the Treaty on the Functioning of the European Union (TFEU). Only objective, gender-neutral reasons such as qualifications or professional experience can justify different pay for the same job. “It is now clear that negotiating skills cannot be the deciding factor in pay differentials,” said Lincoln.

According to the Federal Statistical Office, women received an average gross hourly wage of 20.05 euros in 2022, while men received 24.36 euros. The statistics office explained only part of the pay gap with higher part-time rates and lower salaries in occupations typically held by women.

DGB deputy chairwoman Elke Hannack described the Equal Pay Act, which is supposed to ensure more equality from 2017, as a toothless tiger. “The hurdles for salary information are too high and there are no sanctions,” Hannack told the German Press Agency. “The door to discrimination against women in Germany is still wide open.”

Lincoln takes a similar view: “The law is too weak to protect women.” According to the Transparency Act, the right to information on pay only exists in companies with 200 or more employees. She is hoping for a new EU directive, probably in the summer, that could bring more transparency to women’s pay.

Federal Labour Court, Judgment v. 16.01.2023, Case No. 8 AZR 450/21

The principle of equal pay cannot be waived just because a male colleague demands a higher salary and the employer gives in. The German Federal Labour Court (Bundesarbeitsgericht – BAG) clarified this on Thursday and ruled in favour of a woman who had sued for payment of the difference to her male colleague’s salary and for damages (judgement of 16 January 2023, case no. 8 AZR 450/21). The eighth BAG senate awarded the Dresden woman back pay of 14,500 euros and compensation of 2,000 euros.

The plaintiff, Susanne Dumas, had been employed as a sales employee at a metal company in Meißen near Dresden since 1 March 2017. The basic salary agreed in her individual contract was 3,500 euros gross. Two male colleagues were also employed by the company, one of them since 1 January 2017. He was also initially offered 3,500 euros, which he rejected. Instead, a higher basic salary of 4,500 euros was agreed. After a year, the salaries of the man who had been hired at a similar time to Dumas were equalised – until, after a few more months, both men were again offered a higher salary. However, the second man had been with the company for 30 years, making it difficult to settle the case in court.

Dumas initially sued unsuccessfully for the difference in salary to the male colleague who had been hired at the same time as her. However, both the Dresden Labour Court and the Saxony Regional Labour Court ruled that the unequal pay was justified. The man had only agreed to take the job at the higher salary. The company’s interest in recruiting staff justified the difference in salary, and recruiting staff was an objective criterion.

GFF: Ruling a “milestone
However, Dumas’ appeal to the BAG was successful. According to the BAG, she had been discriminated against on the basis of her sex because she had been paid a lower basic salary for doing the same work. She was therefore entitled to the same basic salary as her male colleague with whom she could compare herself.

The lower salary for the same work gave rise to a presumption of discrimination on grounds of sex under Section 22 of the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz – AGG). According to the BAG, the defendant company failed to rebut this presumption. The company could not successfully argue that the higher basic salary of the male colleague was not due to his gender but to his better negotiating skills.

Dumas’ case was supported by the Society for Freedom Rights (GFF). “This ruling is a milestone on the road to equal pay for women and men. Equal pay cannot be negotiated away – this clarification was long overdue,” said Sarah Lincoln, GFF’s litigation coordinator. In practice, this means that employers can meet the pay demands of an employee or applicant. However, they would then have to increase the pay of an equally qualified and experienced employee, the GFF said in a statement.

Negotiating skills no longer an objective criterion
The prohibition of discrimination on the grounds of gender, and thus equal pay, is regulated by the AGG, the German Pay Transparency Act (EntgTranspG) and the Treaty on the Functioning of the European Union (TFEU). Only objective, gender-neutral reasons such as qualifications or professional experience can justify different pay for the same job. “It is now clear that negotiating skills cannot be the deciding factor in pay differentials,” said Lincoln.

According to the Federal Statistical Office, women received an average gross hourly wage of 20.05 euros in 2022, while men received 24.36 euros. The statistics office explained only part of the pay gap with higher part-time rates and lower salaries in occupations typically held by women.

DGB deputy chairwoman Elke Hannack described the Equal Pay Act, which is supposed to ensure more equality from 2017, as a toothless tiger. “The hurdles for salary information are too high and there are no sanctions,” Hannack told the German Press Agency. “The door to discrimination against women in Germany is still wide open.”

Lincoln takes a similar view: “The law is too weak to protect women.” According to the Transparency Act, the right to information on pay only exists in companies with 200 or more employees. She is hoping for a new EU directive, probably in the summer, that could bring more transparency to women’s pay.

Federal Labour Court, Judgment v. 16.01.2023, Case No. 8 AZR 450/21