German equal pay claim upheld – but not with reference to highest-paid comparator

However, the court rejected the woman’s arguments that she should have been awarded a larger sum, to bring her pay into line with that of the highest-paid male comparator she had identified.

The ruling, by the Higher Labour Court in Baden-Württemberg (LAG), was much anticipated, as it concerned one of Germany’s most closely watched equal pay cases, according to employment law expert Sarah Klachin of Pinsent Masons.

The case was brought by a female manager at Daimler. She claimed the company had discriminated against her on the basis of her gender, as she was paid less than a male colleague operating at the same level. That male colleague earned significantly more money than the average remuneration of male colleagues operating at the same level within the company. The woman sought back-pay for the years she said she had been underpaid in comparison with that individual.

However, before the court, Daimler argued that it was wrong to compare the female manager to the male colleague that she had chosen as a comparator. This, it said, was because the two did not perform the same or equivalent work and because the male employee had operated at the relevant level for a significantly longer time than she had.

In a statement, the court confirmed that Daimler had successfully rebutted the presumption of gender-based discrimination and the equivalence of the activities in this case. It said: “The overall situation with regard to remuneration within the male comparison group as well as the considerably higher working time of the colleague at the relevant hierarchical level suggest that the wage difference here was not based on reasons of gender.”

However, the court said the position was different in respect of comparing the female manager’s pay to that of the average remuneration for male colleagues operating at her level in the company. In that regard, it said Daimler was not able to rebut the presumption of gender-based discrimination and said the female manager can “claim the difference to the average benefits granted (across genders) to the employees in its peer group”.

A spokesperson for Daimler told beck-aktuell: “At Daimler Truck, there is no structural gender-specific discrimination against employees covered by collective bargaining agreements or those not covered by collective bargaining agreements.”

The judgment of the court has not yet been made public. Klachin said employers will want to scrutinise the reasons given in the judgment to fully understand how the court reached its decision and what standards they will need to meet when seeking to rebut a presumption of discrimination in future equal pay cases. She said the ruling comes after the Federal Labour Court (BAG) had issued guidance on how lower courts should assess such claims.

Klachin said: “From an employer’s perspective, perhaps the most notable aspect of the decision is that the LAG did not grant a claim to the remuneration of the highest-paid comparator. Instead, the court confirmed that objective factors can continue to play a decisive role when assessing pay differentials. While the BAG did not hold that a pair comparison automatically entitles an employee to the remuneration of the highest-paid comparator, some employers feared that such an interpretation might emerge in practice. The LAG’s decision is therefore likely to be of particular interest to employers.”

“Following the BAG’s landmark ruling on pair comparisons, considerable attention was focused on how the LAG Baden-Württemberg would implement the Federal Labour Court’s guidance in the remitted proceedings. The decision provides important early indications of how equal pay litigation may develop in the future. However, a final assessment will only be possible once the full written judgment is available,” she added.