New Developments on "Pair Comparison"

Regional Labour Court (LAG) Baden-Württemberg, judgment of 18 August 2026 – 2 Sa 14/24

In its judgment of 18 August 2026 (case no. 2 Sa 14/24), the Regional Labour Court of Baden-Württemberg held that a female employee who relies on a pair comparison with a higher-paid male colleague is not entitled to the full pay difference relative to that colleague if the presumption of gender-based discrimination can be rebutted by taking into account the overall pay situation within the male comparator group and the comparator colleague's greater pay-related seniority. The claimant is, however, entitled to the difference between her pay and the median pay of the male comparator group. With regard to the claimant's share-based remuneration owed in addition (Performance Phantom Share Plan), she is entitled to the average allocation value, but not to the maximum value.

A. Facts

Since June 2008, the claimant has been employed by the defendant, one of the world's largest manufacturers of commercial vehicles, at the third management level (E3, head of department level). Between 2010 and 2018 she took parental leave twice, for a total of around four years and three months, and between the periods of parental leave and thereafter, up to and including 31 December 2022, she worked half-time (50%) at 20 hours per week. Since March 2022 she has also been a (non-released) member of the works council. Since the beginning of 2023 she has again been working full-time.

The remuneration of the defendant's executives consists of, among other things, a fixed base salary, a Company Bonus, share-based remuneration (Performance Phantom Share Plan, PPSP) including dividend equivalents, and a capital component for the company pension scheme (P. C. O.). The individual allocation of virtual shares under the PPSP is made annually on the basis of an overall assessment of the executive at the so-called "Our Peoples Conference" (OPC), with expected future performance used as a criterion.

During the period in dispute, the claimant's pay – taking into account her half-time employment – was below the median of both the male and the female comparator groups at level E3 with respect to each of the pay components fixed base salary, Company Bonus and P. C. O. capital component. Within the male comparator group, the pay of her colleague S. stood out; he had likewise been promoted to management level E3 in 2008 but had since been employed full-time.

The claimant asserted that she was subject to pay discrimination on grounds of her sex and based her claims on Art. 157 TFEU, Sections 3 and 7 of the Pay Transparency Act (EntgTranspG) and, in the alternative, on the principle of equal treatment under employment law. Her primary claim was for the full difference to the remuneration of the named male comparator colleague S. (pair comparison), and in the alternative for the difference to the median pay of the male comparator group. With regard to the PPSP benefits, her primary claim was for the difference to colleague S.'s PPSP benefits and, in the alternative, for the average value of the allocation band.

The defendant rejected the claims, arguing, among other things, that the pay difference was due to the claimant's lower individual value contributions, her lesser professional experience owing to parental leave and part-time work, and the claimant's "underperformance".

The lower court, the Labour Court (Arbeitsgericht) of Stuttgart, had partially upheld the claim by judgment of 19 October 2023 (case no. 22 Ca 7069/21) and awarded the claimant the difference to the median pay. The deciding chamber of the Regional Labour Court of Baden-Württemberg had partially amended the first-instance judgment by judgment of 1 October 2024 (case no. 2 Sa 14/24). On the claimant's appeal on points of law and the defendant's cross-appeal, the 8th Senate of the Federal Labour Court (BAG) set aside that decision by judgment of 23 October 2025 (case no. 8 AZR 300/24) and remanded the case to the Regional Labour Court of Baden-Württemberg for a new hearing and decision.

B. Reasons for the Decision of the Regional Labour Court of Baden-Württemberg

1. No entitlement to the full pay difference to colleague S. in the pair comparison

The Regional Labour Court of Baden-Württemberg held that the claimant is not entitled to the full difference between her pay and the remuneration of colleague S. The chamber expressed doubts under EU law regarding the reasoning of the Federal Labour Court but ultimately refrained from making a request for a preliminary ruling to the CJEU, as the question was not material to the outcome. In particular, the chamber considered it not obvious under EU law (no acte clair) that the higher pay of a single comparator of the other sex always constitutes an absolute indication within the meaning of Section 22 of the General Equal Treatment Act (AGG) and that the overall pay situation must necessarily be disregarded at the level of the probability of causation.

Even assuming that the pay data were fully admissible and that the work was of equal value, the chamber considered the presumption of gender-based discrimination arising from the pair comparison to be rebutted in the individual case. The chamber based the rebuttal, first, on the overall pay situation within the male comparator group and, second, on colleague S.'s significantly greater pay-related seniority at level E3.

The Federal Labour Court has expressly recognised that the overall pay situation (median or average) must be taken into account in the rebuttal and thus constitutes a necessary "corrective for any false indication of a pair comparison". Colleague S.'s prominent pay position within his comparator group weighed heavily against gender-based discrimination. Although both were promoted in 2008, S. had, owing to the claimant's parental leave and part-time work, acquired considerably more full-time experience as head of department by the beginning of the period in dispute. According to the case law of the Federal Labour Court, disregarding parental leave in pay-related seniority is not discriminatory. Likewise, according to the case law of the CJEU, taking part-time work into account only proportionately for seniority constitutes an appropriate application of the pro rata temporis principle and is not discriminatory.

The chamber also expressed concerns about the contradictory submissions of both parties on the equal value of the work. During the proceedings, both parties had taken opposing positions on the value of the work of the claimant and of colleague S. without being able to explain the contradictions plausibly. In the chamber's view, these contradictions are to the detriment of the party primarily bearing the burden of presentation.

In addition, the chamber expressed considerable doubts as to the admissibility under data protection law of using colleague S.'s individual pay data taken from the works council's gross payroll lists. The works council's right of inspection under Section 80(2) sentence 2 of the Works Constitution Act (BetrVG) serves solely the performance of the works council's duties and not the preparation of individual pay claims. The works council may only disclose the average remuneration of the comparator group, not individual pay data of specific persons. Ultimately, however, the chamber left this question open, since the rebuttal had already succeeded on other grounds.

2. Entitlement to the difference to the median pay of the male comparator group

The claim is well-founded with respect to the alternative claims for the difference to the median pay of the male comparator group. The difference between the claimant's individual pay and the median pay of the male comparator group constitutes an indication within the meaning of Section 22 AGG. The defendant was unable to rebut this presumption, as it neither provided specific submissions on the average seniority of the male comparator group nor substantiated its sweeping assertions of the claimant's "underperformance".

3. Share-based remuneration: average value, not maximum value

With regard to the PPSP benefits, the chamber held that the claimant is entitled to the average PPSP allocations together with dividend equivalents, but not to the full PPSP benefits of colleague S.

The pro rata temporis principle in itself precludes a claim by the claimant, who worked half-time, to the full PPSP allocations of a full-time colleague. Moreover, according to the case law of the Federal Labour Court, where differentiations are made within the favoured group, the principle of equal treatment under employment law is directed at the average value. "Levelling up to the very top" is rejected.

However, since the defendant, under a self-imposed rule, deliberately refrained from applying the pro rata temporis principle to part-time employees when allocating virtual shares, it must be held to that rule. The average value was therefore not to be halved on account of the claimant's half-time employment.

C. Practical Note

The decision of the Regional Labour Court of Baden-Württemberg is of considerable practical significance.

First, it confirms that an employer can rebut the presumption of gender-based discrimination arising from a pair comparison by showing that the colleague used for comparison is a top earner within his comparator group. Reference to the overall pay situation alone is not sufficient, however. Rather, at least one further circumstance must be added, such as greater pay-related seniority. In this respect, employers may rely on the comparator colleague's greater pay-related seniority to rebut the presumption of gender-based pay discrimination. Under the settled case law of the Federal Labour Court and the CJEU, disregarding parental leave and taking part-time work into account proportionately for seniority are not discriminatory.

Employers should note, however, that sweeping assertions of an employee's "underperformance" are not sufficient to rebut the presumption. Rather, specific and substantiated submissions on such "underperformance" are required, as are statistical data on the seniority of the comparator group.

Against this background, employers are advised to carefully document the objective criteria on which pay decisions – in particular pay differences between comparable positions – are based, so that they are able to provide sufficiently substantiated submissions in the event of a dispute.