What’s in store for equal pay?
The £100m case brought against Asda by female staff could cause shockwaves for other private sector employers, warns Neil Maclean.
In a landmark equal pay case, the Employment Tribunal has held that female Asda store employees are able to compare themselves to Asda’s (mainly male) distribution depot employees.
Until now, significant equal pay legislation has tended to be limited to the public sector. Could this be the first in a series of high-value claims to hit the private sector?
Around 7,000, mostly female, Asda store workers brought forward an equal pay claim, arguing that their work was comparable to higher paid male distribution depot workers. They said that historically store work has been seen as “women’s work” and therefore valued less. In order for their claim to get off the ground, the claimants needed to show that they were employed on common terms and conditions to the depot workers, and that there was one body capable of remedying any inequality of terms.
The employing entity – ultimately controlled by retail group Walmart – had budgetary control and so had the power to introduce pay equality.
At the preliminary hearing, it was acknowledged that there were some differences between the contracts of employment under which the store workers were engaged and those that applied in the depots. The way the contractual terms were negotiated was also different.
Despite this, the tribunal ruled that the comparisons were, on the face of it, valid. The employing entity – ultimately controlled by retail group Walmart – had budgetary control and oversight of both the retail and distribution elements of the workforce, and so had the power to introduce pay equality. They also found that the claimants’ terms of employment were broadly similar to those of depot employees, both sets of workers were paid an hourly rate, and their employee handbooks were structured very similarly.
What next for the Asda case?
Asda may appeal against the tribunal’s judgment in the preliminary hearing, especially given the sums involved. If the judgment stands, the claimants will be over the first hurdle but will still have to prove their case. They must show that their work is of equal value to the comparators’.
Asda will have the opportunity to contest this and may seek to establish that the difference in pay between the depot and store workers can be justified.
It is estimated that the 7,000 claims currently lodged are worth in the region of £100m. If the claimants succeed, they could be entitled to back pay starting as long ago as six years prior to when the claims were raised, and to a pay increase going forward. The remainder of Asda’s 130,000 store workers, who have not claimed up to now, could then file their own claims to get back pay.
The cost of this could quickly reach into the billions and Asda may take dramatic steps to minimise the impact.
Even employees who do not raise claims should benefit from any forward-looking pay rise implemented to address the issue. It is not just female store workers who are affected: male store workers can also expect their pay to be increased to the level of depot workers. If this is not implemented, male store workers could raise “piggyback” claims to bring them in line with female store workers.
The cost of this could quickly reach into the billions and Asda may take dramatic steps to minimise the impact, for example with an overall pay reduction affecting depot staff to level-down pay. It is likely that such a move would also bring with it complex employment challenges from depot employees and the unions.
Implications for other employers
This is the largest equal pay case in the private sector, and comes as the wave of claims against the public sector is finally dying down. The claimants’ lawyers have noted that there are similar claims being brought on the same basis by workers at other UK supermarkets, so there are signs that the private sector is about to see far more equal pay claims.
The issue is also interesting in light of the new Gender Pay Gap Reporting obligations that will be introduced next year. Any large disparities between male and female pay could trigger claims.
Employers may wish to seek advice now on identifying risk areas within their business and, if necessary, the steps that could be taken to minimise the risk of such claims.
The full version of this article is available in the December 2016/January 2017 edition of CA magazine in association with Shepherd and Wedderburn LLP.