Background

In this ruling, an employee sought retroactive equal treatment from her employer regarding several components of her remuneration that had been granted to certain male colleagues. Her claim was primarily based on information from a “dashboard” that the employer had made available on the company intranet as part of implementing the German Pay Transparency Act. The comparators she referenced earned salaries above the median for all male employees at the same hierarchical level. In response, the employer argued that the top-paid colleagues did not perform work of equal value and further justified the employee’s lower remuneration by citing alleged performance deficiencies.

The Baden-Württemberg Regional Labor Court initially dismissed the claim for compensation for the difference in remuneration compared to the specified reference persons. It reasoned that a presumption of gender-based pay discrimination could not be based solely on a single male comparator. Given the size of the male comparator group and the median earnings of both genders, the court concluded that there was no “overwhelming probability” of pay discrimination.

However, the Federal Labor Court partially overturned this decision and remanded the case to the Regional Labor Court for further factual findings. Crucially, the Federal Labor Court clarified that an “overwhelming probability” of pay discrimination is not required, as such a standard would conflict with EU law. Instead, a presumption of gender-based pay discrimination arises as soon as the claimant demonstrates that the employer pays a higher salary to a colleague performing the same or equivalent work. At that point, the burden shifts to the employer to prove that the pay differential is based on objective, gender-neutral criteria. If the employer fails to rebut the presumption, they must pay the same remuneration as that received by the comparator.

The Federal Labor Court further emphasized that this presumption applies even if the male comparator is the highest-paid employee within the relevant group. Additionally, it acknowledged that internal compensation dashboards introduced to ensure compliance with equal pay requirements and the Pay Transparency Act may serve as valid evidence in support of such claims.

This decision signals a more employee-friendly approach to equal pay litigation in Germany and aligns with the goals of the EU Pay Transparency Directive, which must be implemented nationally by June 2026. In October 2025, Germany’s Commission of Experts published its final report on the implementation of the EU Pay Transparency Directive. The report offers practical recommendations to help employers comply with upcoming requirements, focusing on reducing bureaucracy, clarifying legal obligations, and supporting digital solutions.

Recommendations

The decision reinforces the Federal Labor Court’s established approach to equal pay cases under EU law. The requirements for transparent remuneration structures are steadily increasing. Employers should therefore take proactive measures to mitigate the risk of equal pay claims. This means reviewing and, where necessary, revising compensation systems to ensure that pay decisions are based on clear, documented, and gender-neutral criteria. HR and legal teams must be prepared to justify pay differentials with robust evidence, as the burden of proof now rests with the employer once a comparator is identified.

With the upcoming implementation of the EU Pay Transparency Directive, companies should also anticipate stricter transparency and reporting obligations. Early compliance will not only reduce exposure to legal claims but also help safeguard against reputational risks.