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2016 promises to be an interesting year in German employment law. Only a few days after a draft law on new regulations for temporary work and the differentiation between employment relationships and freelance and works contracts have been published (although it has been meanwhile been withdrawn and will be newly discussed in January) a new draft law on equal pay for men and women has been published by the competent Ministry for Families, Senior persons, Women and Youth. Further the government announced to prepare a further law giving employees the right to return to a fulltime job after having reduced the work time previously.

I. MAIN ELEMENTS OF THE DRAFT LAW ON EQUAL PAY FOR MEN AND WOMEN

The government started with the conclusion that despite all efforts of previous anti-discrimination laws that there is still a large gender pay gap in Germany. In order to enforce the principle of equal pay for same or similar work the new law includes four key elements:

1. A clear definition of basic principles and terms that define "same" and "similar" work,

2. The introduction of an individual right to enquire about salaries for each employee

3. The introduction of mandatory procedures to create equal pay and salary systems within an entity

4. The introduction of a reporting duty for companies with at least 500 employees.

II. INDIVIDUAL RIGHT TO INFORMATION

Article 10 of the draft law includes an individual right to information for employees. Employees might thus ask their employer to inform them about following details:

1. Criteria for the determination of their own salary,

2. Criteria and procedures for the determination of the remuneration for the same or similar work, which is performed by a majority of employees of the other gender (minimum 60%) and their salary group,

3. The statistical median of the remuneration of a group of at least five employees of the other gender, which performs a same or similar task.

In case an employee makes use of the right for information the employer must answer within one month in writing. Data of other employees must be anonymised. The failure to inform an employee or an obvious incomplete answer leads to a shift of the burden of proof. In case of a dispute the employer then must proof that the salary of employee has been determined without any gender discrimination.

Such information must be given (upon request) every two years, provided that the job description has not been changed. The information must be provided to the works council as well.

Article 7 of the draft law clearly states, that the employee has a claim for equal pay retrospectively for a maximum period of three years. Even if the employment contract or a collective agreement contains a shorter forfeiture clause this must not be applied.

Further it is forbidden to have a clause in an employment contract stating that the employee is obliged to keep secret information about his/her salary.

Despite the intention of the law to create a more transparent regulation it seems clear, that numerous disputes might arise about the question which work must be seen as same or similar.

III. NEW OBLIGATIONS FOR JOB ADVERTISEMENTS AND CO-DETERMINATION RIGHTS OF WORKS COUNCILS

The draft law obliges an employer to clearly state in job advertisements which minimum wage will be paid. Further the employer must state, if and in how far he is ready to pay a higher remuneration.

The extended co-determination rights of works counsels include a right to enquire about the individual payments to employees as far as an equal pay principle is concerned. Sanctions include the right for the works council to ask the labour court for future compliance and payment of penalties in case of non-compliance.

IV. MANDATORY PROCEDURE TO EXAMINE THE PRESENT SYSTEM AND CREATE AN EQUAL PAY REMUNERATION SYSTEM

Companies with a regular minimum of 500 employees must conduct a survey, which has to be certified by a governmental authority. Such survey must be done every three year (in case of the applicability of a collective agreement every five years) and is extremely complex. It includes a check-up of the current remuneration system, the provision of a respective report, which must be publicised within the company and a detail documentation of the survey and its results.

Further such companies must issue a report on the equal treatment of women and their fair remuneration.

Although the draft law only addresses companies with at least 500 employees such procedure might also be necessary in smaller entities. According to Article 19 of the draft law a works council can initiate a similar survey and examination, if one or more individual enquiries have shown indications for violations of the equal pay principle.

V. OUTLOOK

Although it is case of a draft law which might of course be changed during the parliamentary discussions the principles of the law have already been established in the coalition agreement between the parties of the failing coalition. Therefore
companies are well advised to prepare themselves for a closer governmentalscrutiny of their equal pay policies. In case of non-compliance employers might have to deal with numerous individual enquiries and for governmental or works council initiated examinations, which will at least mean additional administrativework. In case of violations of the equal pay principles the retrospective adjustment of salaries might have a substantial financial impact.