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Germany: Equal Pay Claims

By - - Employment Law, Equal Pay, Equality, Diversity and Equal Rights

German Courts are getting tougher on employers in the face of growing equal pay claims.

A recent Court decision has provided some helpful clarity on what may count as discrimination.

Facts of the Case

A female managing director successfully claimed that the fact that her salary was EUR 30,000 less than a male co-director, was gender-based discrimination.

The employer argued that the difference was justified as the claimant managed a significantly smaller business unit (she managed 17% of the business with 124 employees while he managed 83% with 308 employees).

The Court found that the employer had failed to rebut the statutory presumption that the salary difference was based on her gender.

The Court’s Decision
  • Both managing directors had service contracts which had been signed in the same month and had identical terms, except for salary.
  • The job advertisement had only required a university degree and made no reference to specific qualification types. It could not be relied on as a distinguishing factor.
  • As between the two business units, there was no significant difference between the qualifications needed for the work or the workload involved.
  • Differences in business unit staff numbers or revenue did not, of themselves, justify different values being attributed to roles.  Even smaller units can prove more valuable to the company as a whole.

As the Court had found that their work was of equal value, it was up to the employer to prove that the pay difference was not gender based. The employer tried to argue that differences in qualification and experience justified the pay gap. This was rejected on the grounds that the male MD’s higher qualifications were matched by the female MD’s longstanding knowledge of the company.

Employers in Germany therefore face ever stricter scrutiny in the face of increasing numbers of equal pay claims.

Points to Note
  • Standard form contracts for similar roles, but with different remuneration – employers need to be ready to defend any gender salary gap with robust, objective criteria.
  • Job advertisements that do not specify the experience or qualifications required, may mean they cannot be used to justify pay gaps.
  • The relative sizes of business units as a guide to value, may not help.

This is a high-level general update only. Legal advice should be obtained on specific circumstances.
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