Judgments of the Higher Labor Court of Baden-Württemberg – Case Nos.: 4 Sa 26/23 and 2 Sa 14/24
Equal pay, meaning the same compensation for women and men doing the same work, remains a persistent issue in the workplace. The Higher Labor Court of Baden-Württemberg has strengthened the claim for equal pay for equal work in two rulings issued on June 19, 2024, and October 1, 2024 (Case Nos.: 4 Sa 26/23 and 2 Sa 14/24).
According to European Union law, women and men must receive the same pay for the same work. In addition, the German Pay Transparency Act (EntgTranspG) stipulates that direct or indirect discrimination based on gender is prohibited when it comes to equal or equivalent work, as explained by the commercial law firm MTR Legal Rechtsanwälte, which also advises on labor law.
Equal Pay for Equal Work
The principle of “equal pay for equal work” was also confirmed by the Federal Labor Court (BAG) in its ruling on February 16, 2023 (Case No.: 8 AZR 450/21). In practice, however, women are still often paid less than their male colleagues for the same work.
The Higher Labor Court of Baden-Württemberg followed the BAG’s legal precedent with its judgment on June 19, 2024 (Case No.: 4 Sa 26/23). In this case, a female employee filed a lawsuit because she was paid less than her male colleague performing comparable work. The woman, who worked as a department head, received a basic salary plus additional compensation components linked to dividends, known as phantom shares. She argued that her male colleagues in similar positions were paid better. They received both a higher base salary and higher bonus payments.
Unequal Pay Due to Gender
Since the employer maintained a pay transparency dashboard, the unequal pay was undisputed and was not contested by the employer. However, the employer claimed that the unequal compensation was not due to gender. Instead, the employer argued that the male colleagues were older, had more professional experience, and therefore received higher pay. Additionally, their work was supposedly of higher value.
As in the first instance, the employer’s argument failed again in the appeal process before the Higher Labor Court of Baden-Württemberg. The court acknowledged that factors such as professional experience, seniority, or even the quality of work could justify different pay. However, it was not evident in this case that these reasons led to unequal compensation. The employer was unable to unequivocally refute the presumption that the plaintiff was paid less due to her gender. The court made it clear that it is the employer’s responsibility to prove that unequal pay is not based on gender.
Same Pay as Male Colleagues
In its ruling of October 1, 2024, the Higher Labor Court of Baden-Württemberg awarded a female department head higher compensation, citing the Pay Transparency Act and the principle of equal treatment (Case No.: 2 Sa 14/24).
In this case, the plaintiff’s pay was below both the median salary of the female comparison group and the median salary of the male comparison group. The department head primarily sought the same pay as a named male colleague or as the highest-paid colleague in the same position. Alternatively, she requested compensation based on the median salary of the male comparison group. In total, she sought back payment of approximately €420,000 gross for five years.
The Higher Labor Court awarded the plaintiff around €130,000 gross. She was entitled to the difference up to the median salary of the male comparison group. However, the court did not grant the maximum differential amount related to the highest-paid colleague in a comparable position, as there were no sufficient indications that this discrepancy was based on gender discrimination.
The court determined that the employer had failed to justify the lower pay compared to the median salary of the male comparison group with factors such as professional experience, seniority, or work quality.
When unequal pay is found in comparable roles, employers must have valid reasons to justify the disparity. Gender must not be a factor in this differentiation.
MTR Legal Rechtsanwälte advises on this and other labor law issues.
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