The GERMAN Federal Labor Court has issued a significant ruling on equality between women and men when it comes to pay. A male colleague negotiated better – the argument employers had so far used to disarm women – is now no longer valid.

The case discussed at the Federal Labor Court: Susanne Dumas (44) signed a contract in 2017 with a metalworking company in Meissen, near Dresden. She accepted the offered starting salary of 3,500 euros (gross). She did the same job as two male colleagues, one of whom had joined the company only a few months before her. She found out that this colleague had a much higher salary – namely, he had asked for – and received 1,000 euros more right from the start.

And later too, when an internal collective agreement was introduced, and when their salaries were supposed to be equalized, he still had 500 euros more, because he had previously asked for and received a raise. She objected and demanded the same salary – but did not get it.

Dumas and her two lawyers argued that this was discrimination on the basis of gender. The employer, meanwhile, invoked the principle of freedom of contract – and won the dispute in the lower courts including the regional court in Saxony.

But last week the German Federal Labor Court ruled in favor of Susanne Dumas and awarded her 14,500 euros in lost earnings and compensation of 2,000 euros.

Important decision

For the business world in Germany, this means that employers can no longer justify differences in earnings by referring to men's negotiating skills. And, what is also important, if an employer accepts a request for higher pay, then it must increase it for those who do the same or similar job, and have similar qualifications and work experience.

“Such behavior practically does not exist among men”

“Negotiating skill” is (was) the main trump card of employers when it comes to unexplained differences in pay, primarily between men and women.

Science, the so-called behavioral economics, helped them in this. “Studies show that men on average negotiate salaries more successfully because on average they demand more,” says Matthias Sutter, director of the “Max Planck” Institute for Research on Collective Goods in Bonn – and he does not see discrimination against women in this.

On the other hand, women sometimes even signal that they would accept a job for lower pay. “Such behavior practically does not exist among men,” says Sutter.

This ruling was quickly met with a sharp reaction from employers: “The court's decision represents a significant interference in the freedom of negotiation of employers and employees and reveals the absurdity of the Pay Transparency Act,” said Reinhold von Eben-Worlée, president of the Association of German Family-Owned Companies, which, according to their claims, employ around eight million people.

Freedom of contract is based on “the fundamental values of our economic system such as competition, efficiency and personal responsibility.” These values are now “worthless” in wage negotiations, said Von Eben-Worlée

Not leveling

Michael Fuhlrott from the Association of German Labor Law Attorneys says that there are factors that still justify differences in pay: among other things, further training, relevant knowledge of foreign languages or something else.

If the employer can objectively prove that the male colleague achieves more than the female employee, he can still earn more.

“So, this ruling does not mean leveling, but simply the consistent implementation of the general law on equal treatment,” says Fuhlrott.

He also adds that male colleagues who earn less than other men can also invoke the ruling – if it is proven that the reason for the lower salary is discrimination. According to the Equal Treatment Act, which the court refers to in this ruling, this is the case with characteristics such as gender, religion, ethnic origin, worldview, disability, sexual identity as well as old age or youth.

The main obstacle to equality – pay secrecy

The Ministry for Family Affairs described the decision of the Federal Labor Court as an “extraordinary and clear sign of the application of the principle that equal pay must be received for equal work.” And one of the largest and oldest associations for women's equality in Germany (Frauenring) announced that the ruling could mean that in the coming weeks, months and years, thousands of employment contracts will be examined particularly closely.

However, Susette Jörk, one of Susanne Dumas's lawyers, pointed to a problem that could arise for many women who want to end discrimination by invoking this ruling.

“The main problem in practice is that women do not know how much their colleagues earn,” she said. The right to information about this, which arises from the Pay Transparency Act of 2017, employees have “only in companies with at least 200 employees – and most women work in smaller companies.”

The German Trade Union Confederation (DGB) says that the ruling could change the world of work in the country. However, “the barriers to pay information are too high and no sanctions are planned. The door remains wide open for discrimination against women in Germany,” said Elke Hannack, deputy chair of the DGB.

Sara Linkoln, Susanne Dumas's other lawyer, sees it similarly and hopes for a new EU directive, probably later this year, which could lead to greater transparency in women's pay.

And in the meantime she advises: “It can be of great help when people at work talk about who earns how much. No one has to worry that anything will be taken away from them in the process. It is always only about others getting more.”

Susanne Dumas left the company she was suing back in 2019. Immediately after leaving the courtroom, crying with happiness, she said that at that moment of victory, she was thinking of her daughters and all other women in Germany for whom this ruling is a turning point.

Source: index.hr