Monitoring Equal Pay - What are the rights of the works council?

Three years ago, in 2017, the Wage Transparency Act came into force in Germany. According to its stipulations the works council plays a central role in asserting information claims by individual employees. In order to be able to fulfil this role the works council is equipped with a number of tools such for example the right to access salary lists. The Federal Labour Court has made it clear, however, that these rights were only provided to the works council to enforce individual information requests and do not constitute a right in itself. This means that the works council cannot claim information rights under this act where the employer chooses to answer information requests without the works council acting as a go-between. The rights of the works council must be seen within the scope of the purpose for which they have been granted.

Federal Labour Court, judgement dated 28 July 2020 – file no. 1 ABR 6/19

It is three years now since the Wage Transparency Act (Entgelttransparenzgesetz) came into force. The goal of the law was to help achieve equal pay for men and women for equal work. The Wage Transparency Act therefore prohibits direct or indirect discrimination based on the gender of employees with regard to any of their salary components. The law provides for various tools to help achieve this goal. By far the most important one is the individual right of information of the employee in accordance with section 10 of the Wage Transparency Act. The employees can submit their information requests to the works council who will collect those requests and forward them to the employer on an anonymous basis. After that the works council will access and review the gross salary lists and will circle back to the employee.

However, in certain cases the employer can decide to answer the information request directly without the works council as go-between. In one of the first cases regarding the Wage Transparency Act that reached the Federal Labour Court (Bundesarbeitsgericht) the court had to decide whether in such a case the works council still has the right to access the gross salary tables; or to phrase it differently: whether there is a link between the right to have the gross salary lists handed over and having the competence to deal with information requests by employees whether they come to the conclusion whether a wage inequality exists or not.

  1. The Facts

    The employer is a telecommunications company employing more than 200 employees. A short time after the Wage Transparency Act came into force in 2017 the employer made use of the possibility to assume the obligation to fulfil the information requests of the employee in general and without allowing the works council to act as intermediary.

    The company informed the works council on a regular basis about any information requests by email; between January and May 2018 in total 28 information requests reached the employer. The employer also allowed the works council to access gross salary lists that were specifically drawn up for this purpose and disclosed all tariff and non-tariff salary components by gender and specified individually negotiated wage supplements.

    It was possible for the works council to access the salary lists either on a personal computer given to the works council for that specific purpose or on a PDF or a printout. The Works Council had the possibility to take notes and make calculations using a pocket calculator or the personal computer.

    However, this was not enough from the point of view of the works council. It requested to be provided with the lists in an electronic format so that its members could conduct a detailed analysis. When the employer refused to provide to the works council the data in that way the Works Council filed a court motion requesting that the employer should provide the documents in electronic format.
    The motion was dismissed in the lower courts and thus reached the Federal Labour Court.

  2. The Decision

    The Federal Labour Court dismissed the request as being not justified.

    First of all, the court confirmed the importance of the works council’s role in the context of this information request process. The architecture of the law is providing the works council with central and essential role: The Works Council is by default competent when individuals want to assert their claims.

    However, the Federal Labour Court made it clear that these rights cannot be seen separately from the scope of the works council’s rights in a specific case. Where the works council does not have any competence, those rights cannot be claimed. The court acknowledges that this does not directly follow from the letter of the act. In that sense the relevant stipulations of the Wage Transparency Act are somewhat ambiguous. Still the court says that its interpretation is favourable as otherwise the access right does not have any rationale. This does according to the court follow from the purpose of that access right. The access right exists in order to bundle up the individual information requests and to help them enforce their information right whilst remaining anonymous. In order to be able to fulfil this task the Works Council has to be equipped with the right not only to have access to the salary lists but also to be able to analyse them. However, there is no requirement for such specific and detailed information right if it cannot serve to enforce any rights under the Wage Transparency Act. In case the employer has assumed the relevant rights, the works council is not competent and can only claim information they require to assert the claims of their limited scope.

    The Wage Transparency Act does not provide the Works Council with the right to have an unspecified general oversight on the matter of equal pay. General oversight can only be exercised based on the general competences of the works council according to section 80 of the Works Constitution Act (Betriebsverfassungsgesetz). But even then the works council’s request would only be justified to the extend the information is necessary for a specific purpose.

  3. Outlook

    Even though the court stresses the importance of the works council’s role in the context of the scope of the Wage Transparency Act it also stresses that the works council can only have information rights if and when they are required for a lawful purpose they want to fulfil. Employers are provided with a powerful tool to rein in the works council when they make excessive information demands. It can be expected that employers will more often assume the right to answer information requests of employees directly in order to be able to limit the right of the works council to have direct and detailed access to employer’s salary databases.

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