Germany: No discrimination through exclusion from payment of inflation adjustment during parental leave

Duesseldorf Higher Labour Court, judgment of 14 August 2024 – 14 SLa 303/24

The initial situation

The plaintiff has been employed by a municipality since 2019. She was on parental leave from June 2023 to April 2024. The plaintiff resumed her work on a part-time basis in mid-December. The collective agreement applicable to the plaintiff provided for a one-time payment in June 2023 to compensate for inflation, as well as further monthly inflation compensation payments in the period from July 2023 to February 2024.

The employer only made a partial payment for the months of January and February 2024, in line with the percentage of working hours. According to the employer, there is no collective agreement entitlement to payment of the coveted bonus for the months in which no work was performed.

The employee then filed a lawsuit, arguing that there had been a violation of the principle of equality under labour law and discrimination on the grounds of gender. In addition, female employees who were receiving sick pay would receive the bonus, so this could also be seen as unequal treatment.

Lower Court: Collective agreement violates Art. 3 I of the German Constitution

As reported in the June 2024 newsletter, the Essen Labour Court ruled that the employee was entitled to the full inflation adjustment premium.

There was no objective reason for differentiating between employees on parental leave and those receiving sick pay or child sickness pay. The collective agreement thus violated the prohibition of arbitrariness under Article 3 I of the German Constitution. As a result, the employee was to be treated like a full-time employee.

Duesseldorf Higher Labour Court: Objective reason for unequal treatment

The Higher Labour Court in Düsseldorf has now rejected this notion. The plaintiff is not entitled to payment of the full inflation adjustment. Rather, there is only an entitlement to payment for the months in which work is performed on at least one day. Therefore, the plaintiff is entitled to payment for December 2023, when she resumed work, but not for the preceding months.

Contrary to the assumption of the Labour Court, there is an objective justification for the collective agreement. The payment of the bonus is linked to the work performance and serves remuneration purposes. Therefore, a violation of Art. 3 I GG can be ruled out. The fact that an exception is made for recipients of sick pay from a social point of view does not exclude this either.

The Higher Labour Court allowed the appeal. It therefore remains to be seen whether the Federal Labour Court will clarify the matter.

Previous case law on the inflation adjustment premium – no entitlement during the passive phase of partial retirement

The Higher Labour Court's decision thus confirms the direction taken in the matter of inflation adjustment. In March 2024, the Higher Labour Court of Düsseldorf had already dealt with the requirements for entitlement to the inflation adjustment payments in its judgment of 5 March 2024 – 14 Sa 1148/23. In that case, an employee who had been excluded from a payment during the passive phase of partial retirement had filed a complaint, arguing that this was a violation of the general principle of equality. Here, too, the court, like the Lower Saxony and Hamm Regional Labour Courts in similar proceedings, came to the conclusion that there was no entitlement.