Written by Sally Grundy, Senior HR Consultant

Following a preliminary tribunal ruling in October, 9,000 female ASDA employees now have the green light to proceed with their equal pay claims.

In this case, which is the UK’s biggest-ever private sector equal pay case, the employment judge held that a predominantly female group of supermarket retail store employees can compare themselves with a predominantly male group of distribution depot employees for the purposes of an equal pay claim.  If the Claimants win their case, it could cost the retailer more than £100m in back pay and other retailers are keeping a close eye on developments.

The female employees claimed that the work that they carry out in store, such as on the check-out, was comparable to that of the mainly male staff who work in the supermarket’s distribution centres.  The difference in pay between the two roles ranged from £1 to £3 per hour.

Asda’s employees who work from their 24 distribution centres, are employed on distribution terms and conditions and none of the distribution centres are located on the same sites as any of the retail stores.

The tribunal considered the laws relating to equal pay both domestic and European in this case.  In terms of domestic legislation, the Equality Act 2010 (which replaced the Equal Pay Act 1970 on 1 October 2010), implements the principle that men and women should receive equal pay for equal work.

There are three categories of equal work: “like work”, “work rated as equivalent” and “work of equal value”. For an employee to be able to bring a “rated as equivalent” claim, the employer must have carried out and implemented an analytical job evaluation study or job evaluation scheme (JES). The process of analysing whether two jobs are of equal value is similar to carrying out a JES, with the tribunal often, but not always, appointing an independent expert to prepare a report to assist it in determining the equal value question.

In terms of European legislation, Article 157 of the TFEU (Treaty on the Functioning of the European Union) sets out the principle that “men and women should receive equal pay for equal work or work of equal value”.

Article 157 allows comparisons to be made between employees in the same establishment or service and the key question is whether the employees’ terms and conditions are attributable to a single source; that is, whether there is a single body responsible for the alleged pay inequality and which can restore equal treatment.

In this case, the judge held that Article 157 of the TFEU was directly effective in this case and that there was a single source responsible for the alleged inequality that could restore equal treatment.

It was held that Asda’s Executive Board and the members or subcommittees of that Board exercised budgetary control and oversight over distribution and retail at all material times. Although it was accepted that the employment terms in retail and distribution are set by reference to different processes, those processes are implemented and operated by the Executive Board which itself is subject to governance by Wal-Mart (Asda was acquired by Wal-Mart Inc in 1999). The Executive Board was therefore responsible for the differences in pay and could have introduced equality.

The judge also held that the claimants also satisfied the test for comparison under section 79 of the Equality Act 2010 as there were common terms generally between them and their comparators (in retail and distribution).  It found that the terms and conditions were set by the same employer and these were reflected in the strong similarities in their respective handbooks. While there were some differences in terms these were not so extensive as to undermine the broad comparison.

The employment judge therefore held that the retail employees were entitled to compare themselves to distribution employees for the purposes of their equal pay claim.

Asda have stated that they will continue to dispute the claims and argued that its distribution and retail sectors were “fundamentally different” and operated in different environments and required different skillsets.  They also point out that the tribunal has yet to consider whether the jobs are of equal value in terms of their demands. If some jobs are, only then will the tribunal move on to consider the reasons for the differentials, including the existence of different market rates in different industry sectors.

In a week which saw Equal Pay Day on November 10th (marking the fact that the UK’s continuing gender pay gap means women will in effect work for nothing from 10 November until the new year), the topic of equal pay is again on the agenda.  The fact that equal pay claims can take many years to resolve raises the question whether equal pay laws and/or the system for dealing with claims is fit for purpose.  Clearly, it is failing to help address the root cause of the gender pay gap.

If you have any queries in relation to pay, please contact your HR Consultancy team for advice.