Equal Pay: the ongoing Asda claim

Over 7,000 current and former employees have been involved in an equal pay claim against Asda. In October 2016, the Employment Tribunal allowed Asda’s retail staff (the majority of which are women) to compare their pay to staff in the distribution centre (the majority of which are men). Asda appealed this decision but their appeal has been rejected by the Employment Appeal Tribunal (“EAT”).

We have set out below the main points from this judgment, and the expectations for the future of the case.

What has the EAT said?

The EAT has upheld the decision of the previous Employment Tribunal that female employees in Asda’s retail stores are entitled to compare their work to that of male employees working in Asda’s distribution centres, who are more highly paid. In doing so, the EAT agreed that the work these two groups of employees carry out is of equal value and that their pay should therefore be comparable.

The EAT’s decision was based on the following findings on the issue of comparability of pay:

1. where there is a “single source” of pay and conditions for both the claimant and comparator, a direct comparison is permitted;
2. the Employment Tribunal may take into account the similarities between a Claimant’s terms and their comparator’s terms, as well as considering whether these are “common terms” for the purposes of the Equal Pay Act 1970 and the Equality Act 2010; and
3. in circumstances where there is no direct comparator employed at a Claimant’s place of work, the employee can rely on a hypothetical comparator at their place of work if that hypothetical comparator would have been employed on largely similar terms to the actual comparator.

What next?

When giving its decision, the EAT strongly encouraged Asda to resolve the extensive equal pay issues between its retail and distribution employees. However, it looks like this case will run on, as Asda has indicated that it intends to appeal against the EAT’s decision. With industry experts speculating that this case could cost Asda up to £100m in compensation to the affected employees, perhaps it isn’t surprising that Asda is looking for any available option to avoid liability.

The facts revealed within this case, and the manner in which Asda has fought against the points raised by its employees, are likely to attract negative publicity for Asda. Some of Asda’s more vocal critics have already called for it to concentrate less on contesting the claims and more on addressing wider industry problem in relation to fair pay practices, with some even encouraging Asda to become a market leader on equal pay issues in the future.

What does this mean for employers?

This is a significant decision for all employers with multiple departments, and is particularly significant for employers in the retail and leisure sectors. Any employer who values work differently across different departments, and pays its employees accordingly, may be at risk of a similar claim from its employees. Particularly where different departments have traditionally been staffed predominately by people of particular genders, as in the Asda case.

Businesses that feel they may be at risk, should take the time to consider how that risk can be mitigated. This might mean reassessing the way they value work or calculate rates of pay within their business.

If you would like to discuss any issues raised in this blog, please feel free to get in touch with our Employment Law experts by telephone on 0161 926 9969 or by email on employment@mlplaw.co.uk. And don’t forget to follow us on Twitter @HRGuruUK for the latest Employment Law updates.