Another milestone on the path to closing the gender pay gap has been ruled in Germany
Women’s Rights Researcher,
Global Human Rights Defence.
On the 16th of February 2023, the German federal labor court ruled in favor of the plaintiff in the "equal pay" case in Erfurt, Germany. Susanne Dumas works in the field service of a metal company and was paid less than her colleague who did the exact same work as she did. The concerned company defended itself with the argument that the man negotiated his higher salary before entering the position. Therefore, his negotiating skills were the main reasons for the difference in payment and this would be part of the freedom of contract. But the court says that this argument can not be counted as an objective explanation of unequal pay for the same work. Hence, it violates the principle of equal work, equal pay (Tagesschau (1), 2023).
This principle has its foundations in EU-Law, precisely in Art. 157 (1) TFEU which states that “each member state shall ensure the application of the principle of equal pay for men and women for equal work or work of equal value”. Germany has done this via corresponding provisions in the Remuneration Transparency Act (§ 7 EntgTranspG). Another law referred to in this case specifies that in the event of a breach of the prohibition of discrimination, the employer shall be obliged to compensate the damage caused thereby (§ 15 AGG). Accordingly, Dumas was compensated with 14,500 euros lost wages and 2,000 euros due to discrimination on the basis of gender (Bundesarbeitsgericht, 2023).
The high practical relevance of the ruling from Erfurt lies in the fact that from now on employers will have to give objective reasons if they want to pay a woman less than a man in the same position. Objective reasons can be among others higher qualification, age or longer work experience but better negotiating skills is not one of them (Henke & Kehlbach, 2023). Moreover, if employers want to meet men's income demands they also have to increase the pay of an equally qualified and experienced female employee. The German Women's Ring said the ruling could lead to thousands of employment contracts coming under scrutiny in the coming months (Tagesschau (2), 2023). It therefore could change the world of work in Germany which is characterized by a gender pay gap of 18% - one of the lowest in the European Union (Duso et al., 2021).
Criticism against this judgment was raised by the president of family entrepreneurs Reinhold von Eben-Worlée, who complained that this decision would be a sharp interference with the freedom of negotiation. He continues that the ruling would place entrepreneurs under general suspicion to intentionally discriminate and fundamental values of our economic system, such as competition, performance and personal responsibility would now become "worthless" in salary negotiations (Henke & Kehlbach, 2023).
However, this fails to recognize that the requirement of equal pay restricts contractual freedom in salary negotiations. If men were able to negotiate a higher salary for the same work, the requirement of equal pay would practically be nullified. It also ignores the fact that women achieve significantly worse results in negotiations than men. The reasons for this are rooted in the social role of women which is commonly associated with the attributes of empathy, caring and commitment to third parties. As a result, women typically find it more difficult to stand up for their own interests with the necessary vigor in negotiating situations (Opitz, 2023).
Lawyer Susette Jörk, who represented Dumas in court, says "unfortunately, we have been waiting in vain for years for progress from legislators or employers. Today's breakthrough is once again thanks to the perseverance of a courageous woman who did not shy away from the legal process” (GFF, 2023).
Bundesarbeitsgericht. (2023, February 16). Sitzungsergebnis 10/23 - Entgeltgleichheit von Männern und Frauen. Retrieved on March 1st, 2023, from https://www.bundesarbeitsgericht.de/presse/entgeltgleichheit-von-maennern-und-frauen/
Duso, Prof. Dr. T, et.al. (March 3, 2021) Gender pay gap in a European comparison: positive correlation between the female labor force participation rate and the gender pay gap. (Volume 11) DIW Berlin
Gesellschaft für Freiheitsrechte e.V. (GFF) (2023, February 16). Equal-Pay-Klage: Gleicher Lohn ist keine Verhandlungssache. Retrieved on March 1st, 2023, from https://freiheitsrechte.org/themen/gleichbehandlung/equal-pay-photon-meissener
Henke, J. & Kehlbach, C. (2023, February 21). Gleiche Arbeit - gleicher Lohn? Retrieved on March 1st, 2023, from https://www.tagesschau.de/wirtschaft/gehalt-unterschiede-bundesarbeitsgericht-101.html
Opitz, N. (2023, February 16). Frauen steht der gleiche Lohn zu. Retrieved on March 1st, 2023, from https://taz.de/Urteil-zu-Equal-Pay/!5916726/
Tagesschau (1). (2023, February 16). Gleicher Lohn ist keine Verhandlungssache. Retrieved on March 1st, 2023, from
Tagesschau (2). (2023, February 17). Arbeitgeber sehen "scharfen Eingriff. Retrieved on March 1st, 2023, from https://www.tagesschau.de/wirtschaft/unternehmen/bundesarbeitsgericht-lohngleichheit-urteil-101.html
Becker, J.O. & Vianden, Dr. S. (2023, February 22). German Federal Labor Court on Equal Pay: Negotiating Skills Are No Justification for Unequal Pay. Retrieved on March 1st, 2023, from https://www.lexology.com/library/detail.aspx?g=178a5772-969d-478c-b461-0ace88d8aabd