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Can a difference in median pay be evidence of unequal treatment? Not in Germany

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Kliemt.HR Lawyers, the first port of call in employment law for top-class and future-proof advice.
German pay transparency legislation gives employees access to data on median wages, but a Regional Court has recently held that this data is not sufficient evidence for a finding of discrimination. 

The Remuneration Transparency Act (ETG) has been in force for just over two years. Under s10 ETG, every employee has a right to information to determine whether his or her salary is based on a fair wage determination. The information also includes information on the settlement payment. For this purpose, the statistical median of the average monthly gross salary, extrapolated to full-time equivalents, as well as other remuneration components specified by the inquirer must be provided. But what does that mean? Is a salary that is below the reported median an indication of a pay disadvantage? The Niedersachen Higher Regional Court (5 Sa 196/19) has held that it is not, with convincing justification.

What was the background?

The plaintiff, head of department at the defendant company, was excluded from a salary increase round in 2017. The defendant invoked deficiencies in the plaintiff’s management behaviour. The plaintiff’s total pay remained at EUR 5,885.40 gross. The plaintiff then applied for salary information pursuant to s11 ETG. This ultimately resulted in a median of EUR 6,892.00 for the settlement fee of the male department heads.

The plaintiff did not hesitate for long. Her complaint claimed a pay difference of EUR 1,006.06 monthly, stating that the information provided by her employer demonstrated a considerable salary inequality between the female and male heads of department. The defendant responded that the remuneration of department heads was based exclusively on gender-neutral criteria.

At first instance, the plaintiff was successful; on appeal her action was dismissed.

Information given under s11 ETG is not evidence within the meaning of the Equal Treatment Act

According to the Niedersachsen Higher Regional Court, there was insufficient evidence, taking into account all the individual circumstances of the case, that there was a probability of more than 50% that pay discrimination on the grounds of sex had occurred.

Section 22 of the Equal Treatment Act (AGG) provides for a relief of the burden of proof, a reduction in the standard of proof and a reversal of the burden of proof relating to the causal link for legal protection against discrimination. If, in the event of a dispute, one party provides circumstantial evidence that leads to an assumption of discrimination on the basis of a discriminatory element mentioned in s1 AGG, the other party bears the burden of proof that there was no violation of the provision on protection against discrimination. This means that for this burden of proof to be satisfied, individuals who consider they have been adversely affected by a violation of the principle of equal treatment only need to present circumstantial evidence that leads to the conclusion that it is more probable than not that discrimination occurred on one of the grounds mentioned in s1 AGG. All circumstances of the legal dispute are taken into account in an overall assessment of the facts of the case.

According to the Niedersachsen Higher Regional Court, information stating that the plaintiff’s salary was below the median of her peer group was not sufficient in itself to satisfy the burden of proof. This information did not contain any information about the average pay level for her own sex or for the opposite sex.

The difference in the amount of pay is irrelevant

The Niedersachsen Higher Regional Court also denied (contrary to the lower court) that this information had considerable evidential weight despite the fact the difference in remuneration was significant. The reasoning behind the decision contains an example to explain this:

Seven women in the comparison group each earn the same as their seven male colleagues (between EUR 1,600 and EUR 2,500). The median is then identical for both sexes (e.g. EUR 1,900).

If the lowest-paid female employee in the comparison group asks for the median of male employees (EUR 1,600), she is told that the median is EUR 1,900.

It would be wrong to see this as an indication of pay discrimination because the claimant happens to be at the lower end of the remuneration level.

Consequences for practice

The median is not a meaningful indication of unequal pay treatment. Nevertheless, the right to information under the ETG will continue to influence people and employers must remain vigilant. According to case law, quotas and statistics may well be indications of discrimination. However, this only applies if they relate specifically to the employer concerned and are meaningful in terms of the employer’s behaviour towards the group with the relevant characteristics. The median, on the other hand, is only the average of many values. A difference in median can only be used as a guide.

It remains to be seen how the Federal Labour Court will position itself. The Niedersachsen Higher Regional Court affirmed the fundamental importance of the legal issues involved in the decision and allowed the appeal. The outcome remains uncertain.

Dr Sebastian Verstege
Attorney - Germany
Kliemt.HR Lawyers