The International Women’s Day on March 8, 2022
International Women’s Day, which draws attention to women’s rights and gender equality worldwide, has been celebrated since 1911. Inequalities often still exist for women, particularly in the working environment. In order to counteract this drawback of the legislator, a number of important employment law innovations have been enacted in the recent years, which are presented below:
The second Leadership Positions Act (FüPoG II):
Women are still particularly underrepresented on the executive levels of companies: In the 200 largest German companies, only slightly more than one in ten board members was a woman at last count. With the introduction of the first Leadership Positions Act in 2015, a first step was taken toward equal participation of women and men in leadership positions in the public and private sectors. While the proportion of women on supervisory boards has noticeably increased, the proportion of women on management boards, on the other hand, has not seen a comparable development. To change this, the German Bundestag enacted a second Leadership Positions Act with the following regulations, which came into force on August 12, 2021:
- According to the minimum participation requirement, listed stock corporations with equal codetermination, with more than 2,000 employees and more than 3 management board members must occupy at least one woman and one man on their management.
- This also applies to European Companies if they are listed on the stock market and more than three executive directors are appointed.
- Any appointment of Executive Board members in violation of this participation requirement is void.
- The provisions on minimum shareholding apply to appointments of stock corporation that were made on or after August 1, Existing mandates remain unaffected.
- Listed companies or companies subject to co-determination (under the Law on One-Third Participation of Employees in the Supervisory Board or the Co-Determination Act) are required to set targets for the proportion of women on the management board, supervisory board and the two management levels below the management board. If they set a target of “zero,” they must provide detailed reasons for doing so in the future. In addition, percentage targets must correspond to a full number of persons. Violations may result in a severe fine.
- The targets are to be achieved within a maximum of 5 years and are subject to a prohibition on deterioration, i.e. once a quota has been achieved, it may no longer be undercut if the target is below 30%.
- The amendments will apply for the first time to reports relating to the financial year beginning after December 31, 2020; they are therefore already be observed now.
- In addition, members of the management boards of stock corporations, European Companies and limited liability companies are granted a right to revoke their appointment for certain periods in the event of maternity leave, parental leave, illness or care of a family member. After the “time out,” there is thus a right to be reappointed as a member of the Executive Board.
- The Supervisory Board must comply with the Executive Board member’s request to revoke the appointment and at the same time assure reappointment after the statutory maternity protection period (Sec. 3 of the Maternity Protection Act) or the maximum three-month period of leave (parental leave, nursing care, illness).
- For the period of absence of a member of the Executive Board, the minimum participation quotas shall be deemed to be fulfilled if they would have been fulfilled without the suspension of the appointment.
Innovations in the Federal Parental Allowance and Parental Leave Act
The reform of the Federal Parental Allowance and Parental Leave Act (Bundeselterngeld- und Elternzeitgesetz) will strengthen the needs of families and support them in reconciling their family life and work even better. The new regulations apply to all children born on or after September 1, 2021.
- The permissible working hours during parental allowance and part-time parental leave were increased from 30 to 32 hours per week.
- The partnership bonus, which supports the parallel part-time work of both parents, can now be drawn for 24 to 32 hours per week (instead of the previous 25 to 30 hours per week). In addition, parents can flexibly choose the period of entitlement between two and four months. Previously, a fixed entitlement period of four months applied.
- In the case of prematurely born children, parents respectively receive an additional month of parental allowance if the children were born at least 6, 8, 12 or 16 weeks prematurely. This is intended to take into account the special situation of premature births and to give parents the opportunity to spend more time with the child in order to compensate possible developmental delays.
The expansion of support and flexibility will create incentives for less and shorter family-related career breaks and a rapid return to work. Administrative adjustments and clarifications are also intended to ease the burden on parents, parental allowance offices and employers. For example, parents who work part-time while receiving parental allowance will only have to provide proof of their working hours in exceptional cases.
Remuneration Transparency Act
Another important step is the Act to promote the transparency of pay structures, which has been in force since July 6, 2017. Among other things, it regulates the following:
- Individual right to information: Employers with more than 200 employees must explain to their employees on request what criteria are used to pay them.
- Private employers with more than 500 employees are required to regularly review their remuneration structures for equal pay compliance.
- Employers with more than 500 employees who are required to submit management reports must also report regularly on the status of equality and equal pay. The reports must describe measures to promote equality between women and men and their effects on achieving equal pay. These reports are available and visible for everyone.
The new legal regulations in labor law are an important step by the federal government toward actual equality. The so-called “gender pay gap” (the wage gap between men and women) still amounts 18% in Germany. Even with the same formal qualifications and also otherwise the same characteristics, there is still a pay gap of 6% according to the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth (BMFSJ). The decisive factor for women’s lower wages is that, although they often work in important, system-relevant occupations (such as retail or social services), they are paid relatively low salaries. The often longer career breaks compared to men and the subsequent re-entry in the form of employment on a part-time or mini-job basis are also a factor that still affects the wage gap.
Companies can also use International Women’s Day as an opportunity to review their corporate culture with regard to gender equality. A “self-test” for a quick check can be found on the website of the German Ministry for Families, Seniors Women and Youth (German version).
