Equal pay: Comparison with a better-paid colleague from another sex is sufficient

With this directive, the European Union aims to reduce the gender pay gap across the EU and ensure that equal wages are paid for equal or equivalent work according to objective and gender-neutral criteria. One of the aims of the EU Pay Transparency Directive is to simplify the judicial enforcement of equal pay. According to Article 18(1) of the Directive, it is sufficient for an employee to present facts that indicate the existence of direct or indirect discrimination. 

Once this has been achieved, it is the employer's responsibility to explain and prove in court that no gender-based pay discrimination exists.

In a ruling by the Federal Labour Court dated 23 October 2025 (8 AZR 300/24), the court significantly reduced the requirements for demonstrating pay discrimination. The verdict was based on a case where an employee demanded equal treatment from her employer retroactively for several components of her remuneration. Her individual remuneration was below the median wages of both the male and female comparison groups at the relevant management level. To prove wage discrimination, the employee primarily compared her own remuneration with the remuneration of the highest-paid male employee in the comparison group. Rulings in previous instances decided that this approach was not acceptable and argued that the employee could not refer to a single person with the same or equivalent job (pair comparison), considering that the male comparison group consisted of several individuals.

The Federal Labour Court, nevertheless, issued a clear ruling against the view of the previous instances, and decided that, to presume gender-based pay discrimination, a single comparison with a better-paid colleague of the opposite sex could suffice if the work performed was the same or equivalent. According to the Federal Labour Court, it is not relevant if the male comparison group consists of several individuals or only one individual.

Considering the current legal situation and the pending implementation of the Pay Transparency Directive, companies are well advised to prepare for stricter requirements in relation to non-discriminatory remuneration policies. Transparency and accountability will become the central criteria for every remuneration decision. Remuneration systems must not only be consistently gender-neutral, but also reliably documented. Routine reviews, clearly defined and uniformly applied evaluation criteria, and systematic monitoring of pay differences are essential in order to identify the potential risk of unlawful discrimination at an early stage and avoid legal disputes.

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Pascal Verma is an attorney-at-law specialising in labour law and a partner of the law firm nbs partners in Hamburg. He specialises in providing labour law advice to employers, with a particular focus on small and medium-sized companies and corporate groups.

Charlotte Thiede is an attorney-at-law at nbs partners, focused on advising employers on all matters of labour law.