Equal pay for equal work: Time and time again, this is revealed to be more of a theory than reality in many cases. In a ruling dated January 21, 2021, the Federal Labor Court (Bundesarbeitsgericht, BAG) has strengthened the position of women (Ref.: 8 AZR 488/19). If a woman earns less than her male colleague in terms of median wage for comparable work, the employer must prove that the lower pay is not gender-based.
According to the German Transparency in Wage Structures Act (Entgelttransparenzgesetz, EntgTranspG) any direct or indirect gender-based pay discrimination is prohibited.
Male Colleagues’ Median Wage Was Higher
In the underlying case, the plaintiff was a female head-of-department employed by the defendant company. For the purpose of discovering whether she was paid less than her male colleagues for comparable work, she exercised her individual right to information in accordance with §§ 10 ff. German Transparency in Wage Structures Act.
It was clear from the information provided by the employer that the comparable pay of male department heads was higher on average regarding both basic pay and allowances. The plaintiff demanded payment of the difference between the base salary and allowance she received and the higher median salary she had been notified of.
The Regional Labor Court of Lower Saxony dismissed the claim in the appeal proceedings (Ref.: 5 Sa 196/19). The court justified its decision by stating that the information provided in accordance with Section 11 of the German Transparency in Wage Structures Act (EntgTranspG) does not constitute evidence which would allow an presumption of gender-based discrimination with a high degree of likelihood, even in the case of significant pay disparities.
Federal Labor Court: Gender-Based Pay Discrimination
The Federal Labor Court has now reversed this ruling. According to the 8th Senate of the Federal Labor Court, the Regional Labor Court should not have rejected the claim on this basis. The information provided by the defendant indicated the comparative pay of the relevant male reference person. According to the Federal Labor Court, this was higher than the plaintiff’s pay, which put the plaintiff at a direct disadvantage.
In contrast to the presumption of the Regional Labor Court, this fact gives rise to the presumption that the pay disadvantage is gender-based. The employer is required to rebut this presumption. The Senate clarified that in this case, the employer bears the burden of proof.
The Regional Labor Court now has to hear and decide on the case again.
The German Transparency in Wage Structures Act has gained significant substance as a result of the Federal Labor Court’s ruling. If the pay of a woman is lower than the pay of comparable male employees as reported by the employer (median pay), it can be assumed that the disadvantage is gender-based. In this case, it is not the woman’s responsibility to prove this presumption, but the employer must be able to show that the lower pay is unrelated to gender. As a result, chances of receiving equal pay have increased considerably for women.