First stage ruling should prompt thoughts on gender pay reporting
Asda’s “£100m equal pay battle with shopfloor staff” has been in the headlines recently after an employment tribunal ruled the equal pay claims of over 7,000 employees could proceed to the next stage of the tribunal process. The outcome has been hailed by the law firm representing the claimants as a “dramatic victory” and as having far-reaching implications for other retailers. But what is the nature of this victory, and what implications does it have for other employers, particularly those in this sector?
The claimants, overwhelmingly women employed in the retailer’s supermarkets, are arguing that they carry out work of equal value to male employees in the company’s distribution centres and that they should be paid the same. They maintain they are paid up to £4 per hour less and that the reason for this discrepancy is that their work has historically been perceived as ‘women’s work’ that is worth less than the men’s. In short, the reason for the difference in pay is their sex.
In equal pay claims, claimants have to compare themselves with an actual person of the opposite sex who is carrying out work of equal value but being paid more. The Equality Act 2010 requires the comparator to be ‘in the same employment’ as the claimant. This was the issue that the tribunal had to rule on and it is not a straightforward one. An employee and his or her comparator can meet the legal test if that person is employed:
- by the same employer
- by an associated employer
- at the same establishment or at different establishments where ‘common terms’ apply.
There are multiple variations on this. In this case, the employees have the same employer but work at different locations.
The employer argued that common terms do not apply between the two groups, pointing to specific differences, and arguing that the terms were negotiated separately at different times in different ways. The tribunal rejected these arguments and held the terms were sufficiently common to mean the men and women were in the same employment.
Even where claimants are unsuccessful at meeting the legal test, they may still be able to establish a valid comparator if there is a ‘single source’ responsible for the pay inequality and which could restore equal treatment. The employer argued this test was not met because its retail and distribution arms were separate divisions that were responsible for determining their own employees’ salary and terms. The tribunal rejected this argument too, and found Asda’s executive board to be the single source of responsibility.
The claimants have, therefore, been victorious in establishing they have a valid comparator for their claim but all this means is that they have not tripped at the first hurdle. There is still a long way to go before ultimate success. It has been suggested that Asda will appeal. Even if the company is unsuccessful, the claimants will need to establish their work is of equal value to their comparators and the employer is then likely to argue that sex is not the reason for any difference in pay and that its actions are justified.
The case is a useful reminder that even where, on the face of it, there are significant differences between the circumstances of two groups of employees, such as different locations, separate divisions and separately negotiated terms, there can still be sufficient connections between the roles to allow one group to use the other as a comparator for equal pay purposes. But given there are still so many gates to get through before the equal pay slalom in the case is completed, it is really too early to say whether the implications for other retailers are great or not.
However, the case does raise the profile of equal pay issues among private sector employees, and employers will wish to be in the best position if they suddenly find themselves in Asda’s shoes. The introduction of the gender pay gap reporting obligations in 2017 gives employers a good reason to carry out data analysis which may help identify potential equal pay hotspots. Organisations can then assess the likelihood of any pay discrepancies being related to sex. Even those employers reluctant to actually address such discrepancies, for fear of provoking back pay claims, will at least have time to document any rationale for the differences that may help an objective justifications defence.
Catriona Aldridge is a senior associate in the employment department at CMS Cameron McKenna LLP
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