Equal pay - what employers need to consider in the event of unequal pay

Facts of the case

The female employee, who has been working for the employer since 2015, claimed, among other things, higher remuneration from the point of view of equal pay treatment in accordance with the German Pay Transparency Act (EntgTranspG) for 2021. She argued this with discrimination compared to her male colleagues. It was undisputed that the basic salary and the "dividend equivalent" salary component were lower than those of the male peer group according to the "pay transparency dashboard" created by the employer itself. The employee claimed unequal treatment on the basis of their gender. The employer argued that the pay differences were not based on gender-specific differentiation. It stated that the difference in pay compared to male colleagues was based on their higher age and longer professional experience. The employee's "value contributions" were also considerably lower than those of her colleagues in her peer group, regardless of their gender. The Stuttgart Labour Court awarded the employee the difference in remuneration. 

The decision

The LAG Baden-Württemberg agreed with the lower court and awarded the female employee a claim for a difference in remuneration. The employee was able to prove (by circumstantial evidence) that she was discriminated against on the grounds of gender within the meaning of Section 1 of the General Equal Treatment Act (AGG) solely due to the difference in pay compared to her male colleagues within the peer group. The established difference in remuneration thus leads to a presumption of a violation of the principle of equal pay. In this case, Section 22 AGG provides for a reversal of the burden of proof. In order to rebut the presumption, the employer must present and, if necessary, prove that the difference in remuneration identified is based solely on a gender-independent difference. The employer claimed that the difference in pay was due to non-gender-specific differentiations. However, it did not sufficiently substantiate the differentiation criteria applied. The employer merely referred to the fact that the male colleagues were older and had been employed by the employer slightly longer on average and that the female employee had only performed below average. However, the employer was unable to explain how the criteria "professional experience", "length of service" and "quality of work" had been assessed in detail, nor how these criteria were weighted in relation to each other. 

Consequences for practice

If a difference in pay has been established on the basis of an employee's right to information, employers are faced with a high burden of presentation and proof to explain the difference in pay by objective, gender-independent factors. The objective criteria put forward must be based on a legitimate objective and be suitable and necessary. In the specific case, the employer was able to present objective criteria for the difference in remuneration. However, according to the decision of the Baden-Württemberg Higher Labour Court, objective criteria must also be assessed and weighted in relation to each other and to the pay difference. The employer failed in this regard. 

Practical tip

Employers should generally remunerate equal and work of equal value equally - regardless of gender. If there are objective criteria that argue against equal pay, detailed documentation is recommended. It is also important to ensure that the weighting of the objective criteria is sufficiently taken into account. In the case of performance-related criteria, on the other hand, other salary components - such as performance-related remuneration - should be used. Remuneration can be gender-neutral (purely performance-related) through target agreements.