5. Legal tips for diversity in the working world

A contribution from Osborne Clarke

There are a number of legal aspects that need to be taken into account when it comes to diversity at companies and institutions. This section is intended to provide an overview.

The EU’s four key directives on equal treatment are particularly important here. They have already been integrated into German law with the enactment of the General Act on Equal Treatment (AGG, also colloquially known as the Anti-Discrimination Act):

• Race Equality Directive (2000/43/EC): implements equal treatment irrespective of racial or ethnic origin.
• Employment Equality Framework Directive (2000/78/EC): establishes a general framework for equal treatment in the workplace.
• Directive on Gender Equality in Access to Employment (2002/73/EC): implements the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions. This directive has since been merged with other directives on gender equality and rewritten as Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (OJ No. L 204 p. 23).
• Directive on Gender Equality in the Access to and Supply of Goods and Services (2004/113/EC): implements the principle of the equal treatment of men and women in areas other than employment.

The directives and the AGG have made their way into various aspects of the working world, from the phrasing of job ads to interactions in day-to-day work. The EU and German legislators are constantly working on furthering diversity and equality, e.g. with the ‘Carers’ Directive’ (Directive 2019/1158) or the ‘Pay Transparency Directive’ (Directive 2023/970) and the (planned) implementation of these into German law.

Job ads

In order to avoid potential discrimination against applicants right from the start, the job ad should be phrased in a gender-neutral way. It should also be neutral as regards potential applicants’ physical condition. No direct mention should be made of applicant age and the ad should not include any restrictions regarding ethnic background, religion or ideology. It should be neutral regarding sexual orientation as well. Phrases such as ‘young professional’, ‘entry-level worker’, ‘age 25 to 35’, ‘good physical condition’ and the like are to be avoided. If a job ad is worded in a discriminatory manner on one of these grounds, this serves as proof of discrimination against applicants with the characteristic in question. Recruitment and HR processes also need to be in line with the AGG. Otherwise, the most interesting candidates may not feel that the ad is aimed at them, and your company could miss out. In the worst-case scenario, you may even run the risk of facing claims for damages.

Interviews and rejections

Diversity also plays an important role in the interview process for potential hires, and not just in job ads. The AGG restricts the kinds of questions the employer can ask. Comments like ‘We need to think about this; you’d be the oldest person on the team’ or inappropriate questions on discriminatory subjects are to be avoided, as they could discourage potential employees. If such questions are asked, applicants are entitled to answer them incorrectly. Additionally, discrimination against applicants can result in claims for compensation and damages, limited to up to three months’ gross wages if the applicant does not get the job, even if the applicant would not have got the job if the selection had been made without discrimination. And in this digital age, a story about discrimination during a job interview can spread like wildfire and quickly harm a company’s reputation.

Unequal treatment in access to employment due to a characteristic connected to one of the statutory grounds for discrimination is only permissible if the characteristic constitutes a genuine and determining occupational requirement, the objective is legitimate and the requirement is proportionate. If applicants are equally well qualified for a position, employers have the right for instance to prioritise female applicants to compensate for an imbalance in the employment of the genders.

In future, the obligations to provide pay transparency, which prohibit in particular (in)direct gender-based discrimination in terms of pay and other pay components and conditions for the same or equivalent work, are to apply even before employment. For instance, applicants are to be given the right to request information about the starting salary, along with a future prohibition on asking about an applicant’s previous income at interview.

During employment

We often forget that diversity is a vital factor during employment as well – the workplace has to be a discrimination-free zone. This can only happen if companies keep a careful eye out for any potential discrimination, direct or indirect.

To that end, companies should raise awareness of discrimination among their human resources departments and other employees. They should also offer specific training courses on the subject. These training courses may be offered as part of diversity management or compliance management, and employees can be granted time off to attend.

In cases of gender-based pay discrimination, the employer can be forced to make back payments of inadequate pay via the methods available under the Transparency in Wage Structures Act and the AGG. An individual right to request information about pay criteria and processes may already exist. In particular, agreements of different levels of pay may not be justified on the grounds of a male colleague having better negotiating skills. In future, employers’ reporting obligations on pay transparency are to be expanded and employees are to be afforded more opportunities to make compensation and damages claims. German legislators need to act on this by 2026.

The employer’s duty of care toward its staff members also means that the employer is required to intervene in cases involving bullying and the like. Every employer needs to be aware that promoting or even tolerating discrimination or bullying is not permitted. Otherwise, the bullying victim may claim for damages against the employer. If the employer does not implement measures to prevent harassment in the workplace or if the measures implemented are clearly unsuitable, the affected employees are within their rights to stop working if doing so is necessary for their own protection. They are still entitled to full pay in this case, in accordance with Section 144 of the AGG.

It is also important for a company to appoint an internal ombudsperson in accordance with Section 13 of the AGG. Employees must be able to lodge a complaint with the ombudsperson if they feel that they are facing discrimination from their employer, supervisor, other employees or a third party in relation to their employment on the grounds of one of the causes listed in Section 1 of the AGG. The employer can decide how to establish the internal ombudsperson position within the company: it can be an individual person at the company or even the managing director. However, if the managing director is the ombudsperson, an alternative ombudsperson should also be appointed in case a complaint is made against the managing director. We recommend giving employees the option to report incidents of workplace sexual harassment to a person of the same gender, if possible. For this reason, employers should consider appointing both male and female ombudspersons. If multiple people from under-represented groups work at the company, we also recommend appointing an ombudsperson from a diverse background.

If your company has a works council, you should also bear in mind that assigning duties to an ombudsperson can constitute a transfer under the German Works Constitution Act (BetrVG). The works council must therefore be consulted in accordance with Section 99 of the BetrVG.

Other aspects such as occupational health and safety can have an indirect impact on diversity at the company. Pregnant women and parents will leave the company sooner or not even apply in the first place if the company does not ensure that statutory (occupational) health and safety regulations are observed. It is essential that the protection periods that apply to pregnant women are observed. These ensure that pregnant women are only allowed to work up to six weeks prior to the birth, with a requirement for them to stay at home for eight weeks following the birth.

Additionally, a further provision due in 2024 is intended to ensure gender equality on the job market: a form of partner’s leave is to be introduced that permits the second, non-birth parent to take paid leave for ten days (two weeks) following the birth of a child. It is currently unclear when this will take effect and what the specific content will be.

At present, provisions concerning parental leave already provide for a period of statutory leave – unpaid but state-funded – from employment for childcare purposes. Additionally, legislators have improved employees’ rights in terms of carer’s or childcare leave over recent years and imposed an obligation on employers to justify any rejection of employees’ requests.

When in doubt, do not hesitate to seek advice from experts.