The Mecklenburg-Vorpommern Regional Labour Court (LAG) clarified in its ruling of 28.01.2025 (Ref.: 5 SLa 159/24) that different remuneration of employees performing the same job does not automatically violate the principle of equal treatment under labour law or the equal pay requirement pursuant to Section 7 of the German Transparency in Remuneration Act (EntgTranspG).
In the case on which the judgement was based, a personnel manager sued for a significantly higher salary after colleagues who were subsequently hired received significantly higher remuneration. The court denied the plaintiff’s claim to payment of the differential remuneration because better professional qualifications and longer, more relevant professional experience constitute objectively justified reasons that allow for unequal treatment.
Facts of the case
The plaintiff was employed by the defendant in October 2020 as a personnel manager with a gross monthly salary of EUR 4,200.00. He is a trained restaurant and hotel specialist with (at the time of employment) over 10 years of professional experience.
In December 2022, the defendant hired another HR manager at a gross monthly salary of EUR 10,000.00, plus commission payment and company car. The new, additional HR manager was a graduate economist with several years of professional experience, but terminated the employment relationship after a short time.
In July 2023, the defendant again hired an additional HR manager – also at a gross monthly salary of EUR 10,000.00 plus commission and a company car. She had a relevant bachelor’s and master’s degree; however, this employment relationship also ended after only a short period of time.
In October 2023, the plaintiff then claimed in court that he was entitled to the same remuneration retroactively since he was hired as was granted to his colleagues who were hired later. After the labour court dismissed the claim, he appealed to the Higher Labour Court.
The decision of the LAG / Reasons for the decision
The Mecklenburg-Vorpommern Higher Labour Court ruled that the employee’s claim was admissible but unfounded, thus confirming the decision of the court of first instance.
1. Principle of equal treatment under labour law
The principle of equal treatment under labour law states that employees may not be arbitrarily remunerated differently if their employer has bound itself by a general salary or bonus regulation. “Arbitrary” or irrelevant means that a differentiation is not based on objective criteria such as qualifications, professional experience or performance, but on mere coincidence or discrimination.
The plaintiff considered this principle to have been violated. However, the LAG found that no comparative group existed before the other HR managers were hired and that there was no uniform company rule or generalising remuneration standards that could have given the plaintiff the same entitlement. In addition, the new HR managers were objectively differently qualified due to their higher academic qualifications (e.g. diploma, master’s degree) and more extensive professional experience. These higher qualifications justify the higher remuneration.
2. Gender-based discrimination, Section 3 (1) EntgTranspG
The plaintiff also claimed discrimination based on gender(Section 3 (1) EntgTranspG). The aim of the Pay Transparency Act is to prevent pay discrimination based on gender and follows the principle of “equal pay for equal work or work of equal value”.
In this case, however, there was no evidence that the plaintiff’s salary was lower due to his male gender. Firstly, the defendant had agreed the same remuneration with both a man and a woman for the same job as personnel manager. Secondly, the higher remuneration was not motivated by gender, but by the better professional qualifications and longer and more relevant professional experience of the two subsequently recruited HR managers.
Recommendation for action
For employers
- Use better professional qualifications or longer and more relevant professional experience of your employees as comprehensible objective reasons to explain salary differences.
- Make sure that remuneration is transparent, documented and justified in order to avoid accusations of arbitrariness and discrimination.
- Even without a standardised remuneration system, you should make consistent remuneration decisions over time in order to reduce disputes. It is advisable to implement transparent salary structures, particularly with regard to the implementation of the EU Pay Transparency Directive by 7 June 2026. According to Art. 7 Para. 1 of the Directive, employees have the right to request and receive information in writing about their individual salary levels and average salary levels, broken down by gender and for groups of employees who perform the same work as them or work of equal value(for more information on the EU Pay Transparency Directive, see: https://haerting.de/wissen/die-entgelttransparenzrichtlinie-equal-pay-jetzt-aber-richtig/).
For employees
- Check carefully whether there is actually a general rule or a procedure based on fixed criteria in the company from which you may have been excluded without an objectively justified reason.
- If you suspect discrimination on the grounds of gender, document relevant evidence or comparisons (e.g. salary information, job descriptions, discussions with comparable colleagues in the company) and speak to a legal adviser at an early stage.
Conclusion
The ruling shows that although the principle of equal treatment under labour law and the equal pay requirement pursuant to Section 7 of the German Equal Pay Act (EntgTranspG) must be observed when remunerating employees, it does not guarantee equal pay if a higher salary can be objectively justified. Better professional qualifications, an academic degree or particularly relevant professional experience can justify unequal treatment. The decisive factor is always a thorough examination of the individual case to determine whether there really is justified unequal treatment, discrimination or an irrelevant disadvantage.