Equal pay update: Can employees compare their pay to colleagues in another business area?

Asda has suffered a further blow in its defence of equal pay claims brought by claimants who work in supermarket stores.

Asda has suffered a further blow in its defence of equal pay claims brought by claimants who work in supermarket stores. In the recent judgment in Asda Stores Ltd v Brierley & Others the Court of Appeal has confirmed that the claimants can compare their pay with male comparators who are employed in a different area of the business with different pay arrangements.

Background

Overwhelmingly the female claimants are employed in supermarket stores and are in receipt of retail terms. They claim that they are employed in work of equal value to male colleagues within Asda’s distribution centres who are in receipt of distribution terms and receive higher pay.

Preliminary Issue

As a preliminary issue, Asda contended that the law did not permit a comparison between two different types of establishment; retail and distribution. The employment tribunal rejected this argument. Asda appealed the judgment to the Employment Appeal Tribunal (EAT), which dismissed Asda’s appeal.

Asda’s appeal to the Court of Appeal

Asda appealed to the Court of Appeal contending that there were not common terms between the claimants and comparators. Further, Asda argued that the pay rates between retail and distribution terms were set by different structures within Asda.

The Court of Appeal held that the correct test is whether the terms of each class of worker would be the same regardless of the establishment at which the workers were employed. It is therefore necessary to consider whether common terms apply as between two establishments, rather than focussing on whether individual claimants and comparators share common terms. The commonality as between terms is assessed on a broad basis, rather than a rigid requirement for all terms to be common.

The Court also found that there was a ‘single source’ responsible for the rates of pay of both retail and distribution employees because Asda’s Executive Board made all principal decisions relating to pay. This meant that it is also possible to compare retail and distribution terms under European law.

It is understood that Asda are considering an appeal to the Supreme Court.

Comment

The Court’s conclusions are unsurprising, as they do not introduce new legal principles. These types of arguments have already been tested in the public sector. The judgment is, therefore, not “landmark” as some media suggest. Previous local authority cases already confirm that comparisons can be made between workers working in different establishments, such as schools and council departments.

One of the main hurdles faced by claimants looking to bring an equal pay claim has been the identification of an appropriate comparator, especially where the comparator works at a different establishment. The Asda decision confirms that this is unlikely to be a sticking point for an employee when choosing a comparator in a different establishment of an organisation when bringing their claim.

Equal pay claims within supermarkets have been highly publicised in the media and the Asda judgment not only makes claims of this nature easier to progress, but may also encourage other claims within the wider retail sector. It is likely that we will see claims arising in other types of organisations. Those most at risk are organisations where there are a large number of employees of one gender carrying out equal work to those of the opposite gender but who are paid less. The claims we currently see in the private sector may be just the tip of the iceberg.

So employers need to ‘wise up’ to potential issues around pay disparity, including at different establishments. An initial step may be to carry out an audit, highlight disparities and seek explanations. To do nothing is a real risk.

On a final point, it is important to note that whilst the Asda equal pay claims have been ongoing for a number of years, they are still in the early stages. The employment tribunal will now need to determine whether the work carried out by claimants and comparators is of equal value. If the work is considered to be of equal value, Asda will have the opportunity to explain any pay differential and to argue that any divergence is unconnected with sex.

Aasha Jassi, aasha.jassi@weightmans.com, and Chris Baker, christopher.baker@weightmans.com are members of the Employment, Pensions and Immigration team at Weightmans LLP. If you have any questions, please do not hesitate to contact Aasha or Chris or speak to your usual Weightmans advisor.

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