Inflation compensation payments
Until the end of 2024, employers had the option of paying employees an inflation compensation premium of up to EUR 3,000 in addition to the remuneration already owed, free of tax and social security contributions.
All employees were eligible for this premium – full-time, part-time, trainees, employees on short-time work and parents on parental leave, etc.
The legal basis for the payment of an inflation compensation premium could consist of a corresponding collective bargaining agreement, which then applied to the respective employment contract.
Mother on parental leave only received part of the premium
A dispute arose over the payment of an inflation compensation premium in the case of a woman in North Rhine-Westphalia: During her parental leave, she was not paid the inflation compensation or only a small part of it.
However, the applicable collective bargaining agreement applicable to them provided for stipulated a special payment to mitigate inflation: a one-off higher payment in June 2023 and further lower premium payments for the period from July 2023 to February 2024. The collective agreement also stipulated that employees had to have worked at least one day of the month in order to be entitled to the payment.
However, the woman was on parental leave during this exact period – from June 2023 to April 2024 – and only worked part-time for her employer from mid-December onward. As a result, she only received the inflation compensation payments for January and February 2024, which were prorated on the basis of her part-time work.
She objected to this, arguing that this collective bargaining agreement provision discriminates against women because women take longer parental leaves than men and, therefore, violates Art. 3(1) of the German Basic Law (GG, principle of equality), Accordingly, she then demanded the full inflation compensation as well as compensation for discrimination from her employer (Section 15 (2) of the General Equal Treatment Act, AGG).
No indirect discrimination through collective bargaining agreements
In contrast to the Labor Court of the First Instance, the Düsseldorf Higher Labor Court did not regard this provision as discriminating against women. The court largely rejected her claim for payment of the premium. In order the court see a justified claim for compensation due to discrimination.
In particular, the court ruled that the criticized differentiation based on whether a person had actually worked for the company in a given month was objectively justified, non-discriminatory and covered by the collective bargaining autonomy of the parties. This is because the compensation for inflation pursues a remuneration purpose and is, therefore, fundamentally linked to work performance. Furthermore, the agreement included exceptions to compensate for particular hardship (such as in the event of illness).
Consequently, the court only awarded the woman a claim to the allowance for the month of December 2023, as the woman had worked at least one day in this month.
What can we do for you?
Do you have questions about inflation compensation premiums – and not just during parental leave? Do not hesitate to contact us!
Summary of the key facts:
- Employers had the option of granting their employees inflation compensation premiums until the end of 2024.
- The premium could be regulated within the framework of the legal requirements for a company (such as a company agreement) or via a collective bargaining agreement.
- A provision in a collective bargaining agreement that makes payment of the premium dependent on working at least one day a month is not discriminatory, even for women on parental leave.
