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Pay transparency for freelance staff?

Judgment of the Federal Labour Court of 25 June 2020 in Case No. 8 AZR 145/19

Freelance staff can be employees within the meaning of the Act to promote Transparency in Wage Structures (Entgelttransparenzgesetz, EntgTranspG) and have a right to information with respect to the criteria and the procedure used to determine their pay.

Facts of the case

The female freelance staff member works as an editor for a public television broadcaster on the basis of a contract for an unlimited period.

In 2018, she requested information under the Act from the staff council of the public broadcaster after she learnt that her male colleagues, both employees and other freelance staff, received a higher level of remuneration. The staff council refused to provide the requested information, arguing that the staff member was not an employee and that the Act therefore did not apply. The freelance staff member then brought the action.

Judgment

After the lower level courts dismissed the case, the Federal Labour Court awarded her a right to information. While she was not an “employee” under domestic law, the term “employee” under the Act must be given a broader interpretation in line with EU Directive 2006/54/EC. In certain cases, this must be interpreted as covering “employee-like” persons. On the basis of her economic dependence on the broadcaster, the freelance staff member must be considered an employee-like person and, as such, should be considered an employee under EU law and thus fell within the scope of the Act.

Practical consequences

Under the Act, employees of operations that usually count more than 200 workers have a right to information to assess whether there is any pay discrimination based on gender. They can request information about criteria and procedures for the calculation of remuneration and on the amount of the remuneration for a comparable activity. These rules are designed to allow employees to assess whether they have been discriminated against with respect to remuneration on the basis of their gender. The Federal Labour Court clarifies that the broader interpretation of the term employee must be applied for this Act. Accordingly, employee-like persons also fall within the scope of the Act, in particular self-employed workers who are not dependent on directions but are economically dependent on their employer.

Practical tip

In principle: the amount of remuneration can be negotiated. There is no obligation on employees to remunerate freelance staff and employees equally for the same tasks. Employers are also generally free to design remuneration models. However, if a remuneration model leads to employees of one sex earning less on average than employees of the other sex, this can be an indication of less favourable treatment under the General Act on Equal Treatment (AGG) and trigger claims for compensation. The Act to promote Transparency in Wage Structures makes it possible for employees (and in certain cases freelance staff members) to assess whether there are wage differences based on gender within the company and to enforce claims under the General Act on Equal Treatment. Indirect disadvantages can also lead to claims for damages under the General Act on Equal Treatment. A wage model, for example, which stipulates a lower hourly wage for part-time workers, could indirectly disadvantage women who are more frequently affected by the wage model. Employers should therefore ensure that there is no disadvantage for any gender – even indirectly – when establishing wage models.

Martina Dierks

TAGS

Labour Law Freelance staff employees