The German Federal Labour court has ruled that the fact that a woman receives lower pay than a comparable male employee will create a rebuttable presumption of discrimination on the grounds of gender. This article explains.
To combat the gender pay gap that still exists today, the German legislator created the Transparency in Wage Structures Act (EntgelttranspG) in 2017, which aims to enforce the requirement of equal pay for women and men for the same work or work of equal value. Claims for disclosure and payment against employers on the basis of this law have not been commonplace in labour law practice so far. However, the practical relevance of the Transparency in Wage Structures Act is likely to increase significantly after the recent decision from the Federal Labour Court. The court held that if a woman sues for equal pay for the same work or work of equal value, the fact that her pay is lower than the comparative pay (median pay) of the comparable male employee regularly establishes a rebuttable presumption that the pay disadvantage is gender related (BAG, judgment of 21 January 2021 – 8 AZR 488/19 -, PM 1/21).
Background to the decision
The plaintiff was a head of department and received information from her employer (the defendant) in 2018 pursuant to s10 of the Transparency in Wage Structures Act, according to which the comparative pay (the statistical median projected to full-time equivalents) of the male heads of department employed by the defendant was higher than the plaintiff's pay both in terms of base pay and allowances. In her complaint, she demanded payment of the difference between her base pay and her allowances and the higher median pay that was disclosed to her.
Interaction of the right to disclosure and s22 of the Equal Treatment Act
The lower court came to the conclusion that the information from the claim for disclosure was not sufficient to be considered as circumstantial evidence within the meaning of s22 of the Equal Treatment Act for a finding of a disadvantage ‘because of gender'. The differences in pay would not automatically allow the conclusion that these differences were due to discrimination ‘because of gender'.
The plaintiff appealed to the Federal Labour Court successfully. The court assumed, on the basis of the claim for disclosure, that the plaintiff had experienced direct discrimination within the meaning of s3(2)(1) of the Transparency in Wage Structures Act, because her pay was lower than that of the comparable male employee. At the same time, this circumstance would constitute an indication under s22 of the Equal Treatment Act that there was discrimination ‘on grounds of gender'. According to s22 of the Equal Treatment Act, it is therefore up to the defendant to rebut the presumption of a discrimination ‘because of gender'. The Federal Labour Court referred the case back to the appellate court because it could not determine whether the defendant had rebutted this presumption in accordance with the requirements of s22 of the Equal Treatment Act.
It therefore remains to be seen how the case will proceed before the Regional Labour Court. Nevertheless, the Federal Labour Court's decision could have great significance for practice. The question is: Will employees bring more equal pay claims in the future because of higher comparative pay of male or female colleagues? On the basis of the most recent federal case law, this path seems to have at least become easier, as the (rebuttable) presumption of discrimination in the case of higher comparative pay removes procedural hurdles for employees in terms of burden of proof. Against this background, employers should be aware of any ‘gender pay gaps' in their organisation and, in case of doubt, be able to explain and prove that the gap is not gender-related.
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