Germany’s Federal Labor Court Rules on Gender Discrimination in Pay – The National Law Review

Report on German Federal Labor Court Ruling on Gender Pay Discrimination

Case Reference: 8 AZR 300/24, Federal Labor Court (Bundesarbeitsgericht), October 23, 2025

This report details a landmark decision by Germany’s Federal Labor Court that significantly strengthens legal protections against gender-based pay discrimination. The ruling has profound implications for corporate governance and the advancement of several United Nations Sustainable Development Goals (SDGs), particularly SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequalities).

Key Findings of the Court and Alignment with SDG 5: Gender Equality

The court’s decision directly supports SDG 5 by seeking to end all forms of discrimination against women and ensure their full economic participation. The ruling establishes a new precedent for achieving equal pay for work of equal value.

Core Tenets of the Ruling

• Presumption of Discrimination: Gender-based discrimination is to be presumed if a female employee can demonstrate that she earns less than a single male colleague performing the same or equivalent work.
• Rejection of Median Pay Comparison: The court held that comparing a female employee’s salary to the median pay of a male comparator group is irrelevant. The existence of even one higher-paid male comparator is sufficient to trigger the presumption of discrimination.
• Burden of Proof Shift: Once the presumption is established, the burden shifts entirely to the employer to prove that the pay disparity is based on objective, non-discriminatory factors.

Implications for SDG 8: Decent Work and Economic Growth

The judgment reinforces the principles of SDG 8, which calls for full and productive employment and decent work for all, including equal pay for work of equal value (Target 8.5). By invalidating justifications based on median pay levels, the court promotes transparent and fair remuneration systems.

Procedural History

1. Initial Claim: A female employee sought equal pay with higher-earning male colleagues, using information from the employer’s own pay transparency dashboard. The employer argued the comparators did not perform equal work and that the claimant’s lower pay was due to performance issues.
2. Lower Court Decision (Regional Labor Court of Baden-Württemberg): The regional court dismissed the claim for parity with the highest-earning comparator, awarding only the difference up to the median. It reasoned that a single comparator was insufficient to establish a “preponderant probability” of discrimination.
3. Federal Labor Court Reversal: The Federal Labor Court set aside the lower court’s decision, stating that the “preponderant probability” standard is incompatible with EU law and undermines the goal of eliminating the gender pay gap.

Advancing SDG 10 (Reduced Inequalities) and SDG 16 (Strong Institutions)

This ruling is a clear action toward reducing income inequality based on gender (SDG 10). It also exemplifies the role of strong judicial institutions (SDG 16) in upholding justice and enforcing non-discriminatory laws for sustainable development.

Future Outlook and Corporate Responsibility

The decision serves as a critical precursor to the mandatory implementation of the EU Pay Transparency Directive (EU) 2023/970, which member states must transpose into national law by June 7, 2026. This legal development compels organizations to proactively align their compensation practices with principles of fairness, transparency, and sustainability.

• Immediate Action Required: Companies must move beyond median-based pay analyses and conduct comprehensive audits to identify and rectify any gender-based pay disparities at an individual level.
• Alignment with EU Directive: The ruling signals that national courts are prepared to enforce the stringent transparency and equality principles that will soon become mandatory across the European Union.
• Contribution to SDGs: By ensuring equitable pay structures, companies not only mitigate legal risk but also make a tangible contribution to achieving SDGs 5, 8, and 10, enhancing their corporate social responsibility profiles.

SDGs Addressed in the Article

SDG 5: Gender Equality

The article directly addresses SDG 5 by focusing on a legal case concerning gender-based pay discrimination. The court’s ruling that “gender-based discrimination is to be presumed where a woman earns less than a comparable male colleague” is a direct effort to combat economic discrimination against women and uphold the principle of gender equality in the workplace.

SDG 8: Decent Work and Economic Growth

The core issue of the article aligns with SDG 8, particularly the principle of decent work. The article explicitly mentions the principle of “equal pay for equal work or work of equal value,” which is a fundamental component of decent work. The legal proceedings and the court’s decision reinforce fair remuneration practices and the rights of employees, contributing to the goal of decent work for all.

SDG 10: Reduced Inequalities

The gender pay gap is a significant form of economic inequality. The court’s decision, which challenges pay discrepancies between men and women performing equivalent work, is a direct measure to reduce inequalities of outcome based on gender. By strengthening the legal recourse for women who are paid less than their male counterparts, the ruling contributes to the broader goal of reducing income inequality.

SDG 16: Peace, Justice and Strong Institutions

This SDG is relevant as the article centers on a decision by Germany’s Federal Labor Court (Das Bundesarbeitsgericht), a key judicial institution. The case demonstrates the role of a strong and effective legal system in interpreting and enforcing laws, such as the German Pay Transparency Act, to protect citizens’ rights and ensure equal access to justice. The ruling upholds the rule of law and enforces non-discriminatory policies.

Specific SDG Targets Identified

1. Target 5.1: End all forms of discrimination against all women and girls everywhere.

   The court’s decision to presume gender-based discrimination when a woman is paid less than a male colleague for the same work is a direct legal action aimed at ending a specific form of economic discrimination against women.

2. Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men… and equal pay for work of equal value.

   The article explicitly references the principle of “equal pay for equal work or work of equal value,” which is the central tenet of this target. The legal case is a practical application and enforcement of this principle.

3. Target 10.3: Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard.

   The court’s ruling is an action that seeks to eliminate discriminatory pay practices. By clarifying that even a single higher-paid male comparator is sufficient to presume discrimination, the court strengthens the legal framework to reduce inequalities of outcome (i.e., the pay gap).

4. Target 16.b: Promote and enforce non-discriminatory laws and policies for sustainable development.

   The article highlights the enforcement of the existing “German Pay Transparency Act (Entgelttransparenzgesetz)” and points to the upcoming implementation of the “European Union’s pay transparency directive (Directive (EU) 2023/970).” These are the non-discriminatory laws and policies that this target aims to promote and enforce.

Indicators for Measuring Progress

• The gender pay gap for work of equal value.

  The article implies this indicator through its entire discussion. The case revolves around measuring the pay difference between a female employee and her “comparable male colleague.” The court’s rejection of the “median pay level” as the sole benchmark in favor of direct comparison with any male colleague, including a “top earner,” points to a granular method of measuring the pay gap for specific, equivalent roles.

• Existence and enforcement of legal frameworks ensuring equal pay.

  The article explicitly mentions two key legal instruments that serve as indicators: the “German Pay Transparency Act” and the “EU’s pay transparency directive.” The court case itself (Ref. No.: 8 AZR 300/24) is a concrete example of the enforcement mechanism of these legal frameworks, demonstrating that the laws are not just in place but are being actively used to seek justice.

Summary Table of SDGs, Targets, and Indicators

Source: natlawreview.com