Quick Hits
- In the event of a discriminatory rejection, employers in Germany are, in principle, liable for lost earnings under Section 15 (1) AGG.
- The claim ends once the affected person has become established in other employment.
- The chain of causation is broken once the person has taken up suitable new employment that has become established.
- Proportionality and the general risks of life limit liability.
The Case—Age Discrimination in an Application for a Trainee Program
An applicant was not admitted to a trainee program because, contrary to the employer’s requirement, he had obtained his university degree more than one year earlier. In 2018, the Hesse Regional Labor Court (Landesarbeitsgericht (LAG)) had already determined that the employer was obliged to compensate for all future material damage resulting from the failure to hire him.
The claimant subsequently demanded approximately EUR 236,000 in lost earnings for a period of several years—the difference between the hypothetical salary had he been hired and his actual income. He took the view that the claim continued without time limit until his retirement. However, he had previously taken up a position commensurate with his qualifications with a public-sector employer and had worked there for several years.
The BAG’s Decision—Established New Employment Breaks the Chain of Causation
The BAG upheld the dismissal of the claim (Ref. No. 8 AZR 153/25).
An employer that violates the prohibition of discrimination is, in principle, obliged to compensate for the material damage—and this claim for compensation is, as to its basis, not limited in scope from the outset. An applicant rejected on discriminatory grounds can therefore, in principle, claim lost remuneration.
The decisive point, however, was the following: The chain of causation between the discriminatory failure to hire and the lost earnings ceases to exist as soon as the affected person has found new, suitable employment and this employment has become established. From that point on, further career development is no longer attributable to the original discrimination, but to the general risks of life. Consequently, the lost earnings claimed by the claimant are not recoverable. The court emphasized that, in line with European Union law, the obligation to pay damages under the AGG is intended to ensure effective compensation, but must at the same time observe the principle of proportionality.
And what if the applicant does not find a new position? The BAG did not have to decide on this scenario. However, there are good arguments against employers being liable until retirement in such a case:
- No right to be hired: Under Section 15 (6) AGG, an applicant who has been discriminated against cannot demand to be hired. Lost earnings until retirement would, in economic terms, amount to precisely such a hiring. It would even protect the applicant better than an employee who was actually hired, whose employment relationship could, for example, be terminated during the probationary period.
- Compensation, not profit: Damages are intended to place the applicant in the position he would have been in had he not been discriminated against, but not in a better position. Anyone who receives compensation for years without working and without bearing the risks of a real employment relationship would be better off.
- Duty to mitigate damages: Unemployed persons who are able to work must make serious efforts to find employment. Failure to do so may reduce or limit the claim.
In cases such as this one, employers may want to request information about the income actually earned and about the claimant’s own job application efforts. In the case decided, the employer had offered the applicant an entry-level position after the rejection and sent him job advertisements in order to demonstrate that reasonable alternatives existed, and thus to limit the lost earnings through the duty to mitigate damages (Schadensminderungspflicht).
Key Takeaways
The decision sets an important limit on the indefinite continuing effect of a damages claim under the AGG. For employers, this means: Even if a court has already issued a final and binding ruling (rechtskräftig) establishing the obligation to compensate for future damage, the claim may cease to exist as to its basis if the affected person has become professionally established elsewhere. In practice, employers facing claims for lost earnings may want to therefore always examine whether the claimant has in the meantime taken up another position commensurate with his or her qualifications. If this is not the case, it may be worthwhile to look at the claimant’s efforts to find a new position: There is much to suggest that a claimant who rejects reasonable offers or does not seriously apply for jobs cannot simply demand permanent compensation for lost earnings on account of the original rejection.
Anna Maria von Lieres und Wilkau is an associate in the Berlin office of Ogletree Deakins.
Zeynep Yildirim, a law clerk in the Berlin office of Ogletree Deakins, contributed to this article.
Ogletree Deakins’ Berlin office and Global Reorganizations Practice Group will continue to monitor developments and will post updates on the Cross-Border, Germany, and Diversity, Equity, and Inclusion Compliance blogs as additional information becomes available.
