LAG Berlin-Brandenburg: Consistent compliance measures protect employers from AGG liability

The use of the "N-word" by a supervisor toward an employee does not necessarily lead to the payment of compensation under Section 15 (2) AGG if the employer takes consistent compliance measures in a timely manner in response to a complaint from the employee. This was decided by the Berlin-Brandenburg Regional Labor Court in its ruling of May 16, 2025 (12 Sa 1014/24). It dismissed the appeal of an employee who had claimed compensation and the invalidity of a subsequent dismissal with the option of altered conditions of employment.

Facts of the case

The plaintiff, who is black and had been employed as Head of Analytics at the defendant's company since January 2023, was insulted by his supervisor early in the morning during an offsite trip abroad in February 2023 while under the influence of alcohol in their shared hotel room by using the "N-word". He complained with reference to Section 13 of the General Equal Treatment Act (AGG) and demanded EUR 10,000 in compensation from the defendant employer. The defendant took other measures in response to the complaint. It issued a warning to the supervisor and required him to attend training on the subject of discrimination. In June 2023, the defendant issued the plaintiff with a notice of termination with modification. From then on, the plaintiff was to continue working as a "lead data analyst" under otherwise unchanged contractual conditions.

LAG: Violation of dignity, but no "hostile environment" – consistent response by the employer as a decisive factor

The LAG affirmed that the use of the "N-word" constituted a violation of dignity and clearly classified the term as racist discrimination.

However, it found that the second element of harassment under Section 3 (3) AGG, namely the creation of a "hostile environment," was not present. In line with BAG case law, the LAG ruled that isolated incidents did not, in principle, constitute a hostile environment unless they were particularly serious. This was to be decided on the basis of an overall assessment.

In the present borderline case, according to the LAG, factors against a pervasive hostility in the working environment prevailed, including the situational circumstances (external event, in the early hours of the morning, influence of alcohol, hotel room outside the actual place of work) and, above all, the consistent reaction of the employer. The LAG emphasized that the offense was only caused by the offensive behavior of a single person and that no hostile environment arose from other employees or even superiors joining in the offensive behavior, but rather that the defendant responded to the incident by sanctioning the superior. Specifically, the defendant clarified the facts of the case, issued a warning to the supervisor, and required him to attend training on the subject of discrimination – an overall picture that clearly does not tolerate discriminatory behavior.

The LAG considered the dismissal with the option of altered conditions, which was issued four months later and merely changed the plaintiff's title, to be valid. It found that there had been no violation of the prohibition of discrimination under Section 16 AGG. In applying the distribution of the burden of proof under Section 22 AGG, the LAG was unable to establish a connection between the plaintiff's complaint and the dismissal with the option of altered conditions. The defendant had plausibly argued that two teams had been merged. The dismissal was not reviewed against the criteria of Section 1 (1) KSchG, as the six-month waiting period – which also applies to dismissals with the option of altered conditions – had not yet expired.

Compliance measures in practice protect against AGG liability

The Federal Court of Justice (BGH) has already ruled in the past that an effective compliance management system (CMS) can reduce a fine under Section 30 OWiG and that optimizing the CMS in response to the fine proceedings can also have a positive effect on the assessment (BGH v. 09.05.2017 – 1 StR 265/16).

The current decision of the Regional Labor Court also sends a clear signal for labor law practice: an effective, documented, and practiced compliance mechanism can protect employers from AGG liability risks. Specifically, the court considers the employer's repressive compliance measures as evidence against the assumption of a hostile environment. Where companies act immediately, in a structured and proportionate manner after an incident of discrimination, they demonstrate that they have fulfilled their prevention and protection obligations under Section 12 AGG and undermine the assumption of structural tolerance of discriminatory behavior.

Practical note

The LAG's decision shows that an effective, risk-based, and actively implemented compliance management system is indispensable in a company. In addition to preventive measures such as codes of conduct, regular training, and transparent reporting channels, an effective CMS also includes repressive measures in particular. These include consistent internal investigations and sanctions under labor law.

If an allegation is made, the facts should be clarified immediately, appropriately, objectively, and documented as part of an internal investigation. Based on the findings, the necessary further measures should be initiated. The quality and traceability of these steps are expressly taken into account by courts in their overall assessment and, as the decision shows, can have the effect of excluding liability.