Federal Labour Court Eases Equal Pay Claims

Presumption of pay discrimination: Comparison with a single better-paid colleague is sufficient

The principle of equal pay is gaining increasing importance in practice. While Germany is still awaiting the implementation of the EU Pay Transparency Directive, and the Federal Minister for Equality recently established a commission in July to develop proposals for its implementation, the Federal Labour Court has further lowered the requirements for demonstrating pay discrimination.

Development of the equal pay principle

The EU principle that women and men must receive equal pay for equal or equivalent work has long been established. In practice, however, it was difficult to enforce due to a lack of information available to employees. Since the Pay Transparency Act came into force in 2017, employees have had the right to request information on the median pay of the opposite sex.

Since then, the Federal Labour Court has significantly strengthened the rights of employees. In its judgment of 21 January 2021 (case no. 8 AZR 488/19), the court held that demonstrating lower pay compared to the median pay of the opposite sex gives rise to a presumption of pay discrimination. If the employer cannot rebut this presumption, the employee is entitled to equal pay.

Federal Labour Court expands presumption of pay discrimination

The Federal Labour Court’s judgment of 23 October 2025 (case no. 8 AZR 300/24) goes beyond previous requirements for establishing a presumption of pay discrimination. In the case at hand, a female department head claimed retroactive financial equalisation from her employer. Unlike in earlier cases, she did not rely on the median salary of the male comparison group, but on the salary of a single male colleague who earned significantly more than the median.

While the Higher Labour Court of Baden-Württemberg (judgment of 1 October 2024, case no. 2 Sa 14/24) had held that comparison with a single male colleague earning above the median could not establish a presumption of causality for pay discrimination, the Federal Labour Court now decided otherwise. According to the court, it is sufficient for the presumption of pay discrimination if the claimant demonstrates and proves in case of dispute that her employer pays a higher salary to a single colleague performing equal or equivalent work. The size of the male comparison group and the median salaries of both gender groups are irrelevant for the presumption.

However, the Federal Labour Court did not award the claimant the full amount of the additional pay claimed, but referred the case back to the Higher Labour Court. That court must now examine whether the employer can effectively rebut the presumption of pay discrimination.

Implications for practice

The Federal Labour Court’s decision once again strengthens the rights of employees and highlights the importance of transparent remuneration systems. Employers are well advised to already embed objective and gender-neutral criteria in their pay structures and apply them consistently. Even though the Pay Transparency Directive has not yet been transposed into national law, employers should align their job evaluations with the criteria mentioned in the directive’s recitals: skills, effort, responsibility and working conditions.

By implementing these standards, employers fulfil their existing legal obligations, minimise the risk of equal pay claims and prepare for the forthcoming national implementation of the Pay Transparency Directive.