News on the equal pay front

More uncertainties regarding the standard of comparison for equality of pay claims

It is imperative that any pay discrimination based on gender is promptly and effectively addressed and rectified. Henceforth, companies are obliged to implement a remuneration structure that ensures equal pay for work of equal or equivalent value.

On 1 October 2024, the Regional Labor Court (hereinafter LAG) of Baden-Wuerttemberg handed down a landmark ruling (2 Sa 14/24) in a case concerning pay transparency and the equal treatment of men and women in remuneration. The court had to rule on the claim of a female employee who sought equal remuneration with a specific male colleague employed in a comparable position.

Since the complete judgment of the LAG is not yet available, the press release published by the court leaves room for questions and interpretations. As a result, the following article can only consider to a limited extent whether the previous case law of the Federal Labor Court (hereinafter BAG) and the case law of the European Court of Justice (hereinafler ECJ) has been sufficiently taken into account. One issue that stands out is whether the female plaintiff was permitted to make a direct comparison with a specific male colleague and claim the resulting compensation difference, or whether she was only entitled to the difference between the female and male median compensation, as the LAG had determined. Moreover, it is necessary to determine whether the General Equal Treatment Act can or even must be entirely disregarded when it comes to unequal pay claims. Going forward, the implementation of Directive 2023/970 (EU) on the reinforcement of the application of the principle of equal pay for men and women for work of equal value will again change the playing field for equal pay claims in the German court system. The implementation of Directive 2023/970 (EU) into German law will force companies to establish transparent pay structures and will lead to new enforcement mechanisms.

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