Selective salary increase: Performance incentive or discrimination?

In the world of highly skilled immigration to Germany, there is often a tacit agreement: excellent education and specialized expertise are rewarded with market-based compensation and fair career advancement opportunities. However, behind the gleaming facade of modern office complexes in Berlin, Munich, or Hamburg, a bitter reality often simmers, which can be legally summarized as discrimination against foreigners . The situation becomes particularly critical when financial bonuses or fundamental salary increases are tied to conditions that effectively exclude certain groups. The urgent question arises whether the often-lauded freedom of contract for employers ends where the systematic discrimination against foreign professionals begins. The General Equal Treatment Act (AGG) is the sharpest weapon available to employees in this regard, but its practical application is more complex than the legal text suggests.

A closer look at the principle of equal treatment in employment law

A recent case, which went all the way to the Federal Labor Court (BAG), illustrates the fine line between permissible differentiation and unlawful arbitrariness. An employer had decided to increase the base salary – but only for those employees who had agreed to a new employment contract . Employees who clung to their old contracts received nothing. The official justification was that the salary increase was intended to incentivize employees to switch contracts . What at first glance appears to be a legitimate business decision turns out, upon closer legal examination, to be a problematic undertaking.

As a law firm, we repeatedly observe that highly qualified migrants are often "stuck" in older contractual structures, such as those concluded under their initial EU Blue Card . If wage increases are used as leverage to pressure employees into new, potentially more advantageous contract models for the employer, the principle of equal treatment under labor law applies . This principle states unequivocally that an employer who grants benefits according to specific criteria may not arbitrarily treat comparable employees differently. Differentiation is only permissible if it is objectively justified . The Federal Labor Court (BAG) clarified in its ruling that such unequal treatment was inadmissible in the specific case.

Why the incentive function often fails

The reasoning of the judges at the Federal Labor Court deserves special attention, as it directly attacks the common practice of many HR departments. The decisive factor is always the purpose of the benefit , not merely the effect of excluding certain individuals. An incentive function can only serve as legal justification if the favored group can still actually influence the objective. Those who have already signed a new contract can no longer contribute – the incentive thus evaporates the moment the contract is signed. This eliminates the objective justification for higher pay compared to those who refuse the change. General salary increases are not a suitable instrument for influencing behavior . We strongly criticize companies for using this loophole to eliminate undesirable contract clauses or to optimize cost structures at the expense of those who, perhaps due to their immigration status, are less inclined to seek legal recourse. Especially for skilled workers from abroad, salary is not just a matter of living standards, but is often directly linked to the requirements of the immigration authorities (e.g., minimum salary thresholds according to Section 18g of the Residence Act ). Inadmissible differentiation in wage development can have serious consequences for long-term residency prospects.

The General Equal Treatment Act (AGG) as a shield against hidden exclusion

When discussing selective wage increases, we must also address the risk of indirect discrimination under Section 3 Paragraph 2 of the German General Equal Treatment Act (AGG) . Often, it is precisely the foreign experts who are concentrated in specific projects or departments. If a wage increase is tied to criteria that, statistically speaking, are more likely to be met by German citizens, the accusation of discrimination based on ethnic origin arises . We advocate a strict interpretation of the AGG: employers must demonstrate that their criteria are objectively appropriate and justified by a legitimate aim. A mere "incentive to change jobs," which effectively disadvantages a group that depends on the security of their existing (and officially vetted) contracts, does not withstand this scrutiny.

It is a worrying development when loyalty to an existing contract is penalized through financial sanctions in the form of withheld wage increases. For a highly educated, mobile, and globally sought-after clientele, this sends a disastrous message. Unequal treatment requires a clear, objective justification that goes beyond mere employer convenience. If companies want to create incentives, they should opt for separate solutions such as one-off payments or bonuses, rather than manipulating the fundamental structure of compensation.

Conclusion: Legal certainty through transparency

In summary, the Federal Labor Court's (BAG) jurisprudence has sent a clear signal against arbitrary wage policies. Differentiating wage increases is not a license for employers to act arbitrarily . Anyone granting benefits according to a general principle must uphold the principle of equal treatment. For foreign skilled workers , this means they do not have to accept discrimination without protest simply because they have not signed "voluntary" contract amendments. The protection afforded by the General Equal Treatment Act (AGG) and the principle of equal treatment under labor law applies without restriction, regardless of nationality. Fair pay is not a privilege, but an enforceable legal right.

How Visaguard can support you

As a specialized law firm for visa and employment law, we understand the unique intersection where international professionals operate. We not only help you secure your residence permit, but also critically examine whether your working conditions and compensation comply with legal standards. If you feel you have been passed over for salary adjustments due to your status or contract history, we will thoroughly analyze your situation and represent your interests against your employer – discreetly, professionally, and with the necessary tenacity. We ensure that your path in Germany is not derailed by legal arbitrariness.

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