On 28 October 2015, the Higher Labour Court (Landesarbeitsgericht, LAG) Rhineland-Palatinate (October 28, 2015 – docket number: 4 Sa 12/14) decided that an employer who pays female employees less than their male counterparts is liable to pay the difference in damages plus a compensation award. Any employers not complying with the “equal job – equal pay” principle are highly recommended to change their approach to pre-empt high claims being levied against them.
In this decision the employer paid a lower hourly wage to its female employees than its male employees. The plaintiff presented a claim in damages for the difference in pay (€ 11,016.30 for a period from January 2009 to 2012) and additionally compensation under the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz, AGG). The plaintiff was originally awarded € 11,016.30 in damages and € 3,000 in compensation by the Labour Court (Arbeitsgericht, ArbG) Coblenz. In the appeal the plaintiff raised her claim for compensation (originally claiming “at least € 2,000″) and argued that the compensation awarded by the Labour Court Coblenz was too low and should at least be the equivalent of four gross monthly wages plus the proportionate bonus for four months of work (€ 7,735.72).
The Higher Labour Court agreed with the plaintiff that compensation of € 3,000 was too low. The court argued that any compensation awarded under the General Equal Treatment Act must be proportionate to the transgression in order to ensure an effective protection of the rights of equal treatment. The compensation award should be high enough to be an effective deterrent from discrimination. In this case the court found that the employer had discriminated against many women for years and that this was such a substantial breach that significant compensation is to be awarded. However, a direct correlation between wage paid and the compensation to be awarded was negated. The Higher Labour Court Rhineland-Palatinate changed the ruling of the Labour Court Coblenz and awarded € 6,000 in compensation.
The decision demonstrates that discrimination against employees (and applicants) is a costly and outdated practice and is no longer feasible. Non-complying employers face the risk of costly and public labour court hearings.