Presumption of Discrimination due to Gender in Equal Pay Claims

If a woman’s pay is lower than the comparative pay of her male colleagues, there is a rebuttable presumption of discrimination due to gender.

The Problem
According to the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz), discrimination on the basis of certain characteristics is unlawful. However, it is often impossible for the person discriminated against to prove this causal connection. Therefore, Section 22 of the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz) eases the burden of proof: The person discriminated against only has to provide indication of this causal connection. Whether a circumstance is to be regarded as such indication is often a subject of dispute between the parties.

The Ruling
This was also the case in a matter that the Federal Labour Court (Bundesarbeitsgericht) recently had to decide (reference number: 8 AZR 488/19). A female head of department received notification from her employer in accordance with Sections 10 et seqq. of the Pay Transparency Act (Entgelttransparenzgesetz), revealing the comparative pay of her male colleagues, which surpassed her pay. Consequently, she sued her employer for payment of the difference between her pay and the comparative pay. After the Higher Labour Court (Landesarbeitsgericht) had dismissed her claim, the Federal Labour Court (Bundesarbeitsgericht) ruled as follows: If a woman asserts a claim for equal pay (Art. 157 TFEU, Sections 3 and 7 of the Pay Transparency Act (Entgelttransparenzgesetz)), the fact that her pay is lower than the comparative pay of the male comparator notified by the employer pursuant to Sections 10 et seqq. of the Pay Transparency Act (Entgelttransparenzgesetz) gives rise to the presumption that the discrimination in pay was due to gender. The employer can rebut this presumption but, unlike the employee, he bears the full burden of proof.

Conclusion
With this ruling, the Federal Labour Court for the first time allowed the mere existence of unequal treatment to suffice as an indication. While this has made it considerably easier for women to challenge pay inequity, it poses challenges for employers. Even the bona fide employer can now be held liable for differences in pay unless he can substantiate the reasons for these differences in pay. However, only the employer who is prepared to explain the salary structure in the company will succeed in doing so. Employers are therefore strongly advised to check the salary structure in the company for differences in pay of comparable employees and to critically question the basis of these differences in pay.