German court clarifies limits of equal pay claims

A ruling by the Landesarbeitsgericht (LAG) Baden-Württemberg has clarified the limits of equal pay claims in Germany. The case involved a female executive seeking higher compensation, including base salary, variable pay, and stock-based components, by comparing her earnings to a male colleague at a similar leadership level.

The court determined that while a comparison with a single individual of the opposite gender can be sufficient to create a presumption of discrimination, it does not grant an automatic right to match the highest salary in a peer group. In this instance, the employer successfully argued that the colleague's higher pay was due to his longer tenure and the specific structure of the comparison group.

As a result, the plaintiff was awarded the difference between her individual compensation and the median salary of the male comparison group, rather than the full amount earned by the highest-paid colleague.