Discriminatory rejection: liability ends with the new job

The claim: liability until retirement

A rejection, a judgment finding discrimination, and after that the difference in salary until the start of his pension: that was how a rejected applicant saw the bill. The Federal Labour Court (BAG) set a limit to it in its judgment of 10 September 2026 (case number 8 AZR 153/25). Anyone who has been discriminated against when a post was filled, and who would have been hired but for the disadvantage, can indeed claim compensation for the lost salary. That liability ends, however, as soon as the applicant has found suitable new employment and that employment has become established.

The case concerns material damages under the General Equal Treatment Act (AGG), that is, compensation for financial loss such as lost salary. This must be distinguished from compensation for non-material damage, that is, for the disadvantage as such. The applicant had raised both claims in earlier proceedings. The new proceedings concerned only the salary he had allegedly lost year after year.

The case: rejection in 2009, litigation until 2023

In 2009, the applicant had applied for a position on a company's trainee programme and received a rejection on 19 April 2009. In 2018, the Hesse Regional Labour Court held that this amounted to unlawful discrimination on grounds of age. It ruled that the company had to compensate "all future material damage" suffered by the applicant as a result of not being hired.

On the basis of that declaratory judgment, the applicant claimed around EUR 236,000 in lost earnings for the years 2020 to 2023. His calculation: the difference between the salary he would have received in the position advertised in 2009 and what he actually earned in those years. The claim, he argued, was unlimited in time, in other words until he retired. The Labour Court and the Regional Labour Court dismissed the claim. The appeal to the Federal Labour Court was unsuccessful.

AGG damages with no upper limit

For companies, the judgment begins with an uncomfortable confirmation. Anyone who unlawfully disadvantages an applicant who would have been hired but for the disadvantage owes that applicant, in principle, the lost remuneration. The statute does not cap the extent of this liability from the outset. A declaratory judgment such as the one from 2018 records that obligation for the future.

Whether damage has "arisen" from the discrimination, and in what amount, is a question the court answers according to the general rules of the law of damages. Under those rules, only what the breached provision is intended to prevent, measured by its protective purpose, is compensated. Damages under the AGG are meant to secure effective redress, as EU law requires, while remaining proportionate. From this dual aim the court derives the limit.

The limit: the established new position

The connection between a discriminatory rejection and loss of earnings ceases once the applicant has found suitable new employment and that employment has become established. Lawyers speak of the chain of attribution. The point is that a later loss of earnings must still be traceable to the discrimination. At some stage the subsequent career path overlays the old rejection.

In this case, that point had been reached. Even before 2020 the applicant had taken up work with the central immigration authority of a public-sector employer, a role that matched his qualifications. He stayed in that employment relationship for several years. His further professional development therefore falls within the general risks of life and is no longer attributable to the disadvantage he suffered in the recruitment process. Anyone who has been suitably employed for years can no longer bill the former employer for the salary difference compared with a position from 2009.

What this means for companies

A declaratory judgment covering "all future material damage" reads like a blank cheque running until retirement. It is only honoured as long as the damage is still attributable to the discrimination. The court names two features for this. The new employment must be suitable, which in this case meant a role at the level of the applicant's qualifications. And it must have become established, which in this case meant over several years. No fixed time limit or salary threshold follows from this.

Anyone defending against claims for loss of earnings therefore looks first at the applicant's career path since the rejection. Which position did they take up and when, does it match their qualifications, and how long has it lasted? These questions decide years' worth of salary differences. In the case decided, around EUR 236,000 was at stake for 2020 to 2023 alone. The decision concerns only material damage. It says nothing about compensation for the disadvantage itself.

The second lesson concerns duration. More than seventeen years lie between the rejection in April 2009 and the Federal Labour Court's judgment in September 2026. A dispute over a trainee position lasting that long costs money and time even if the employer wins in the end. The limit on liability helps after the event. A selection procedure geared to the requirements of the role and leaving applicants' age out of the picture helps beforehand.