Private sector equal pay: the next big thing?

The public sector has faced huge liabilities over the past decade with many thousands of equal pay claims. The private sector has largely escaped,…

The story so far

Public sector organisations have faced huge liabilities over the past decade with many thousands of equal pay claims. The private sector has largely escaped, until now.

Given the publicity around potential pay outs in the public sector, it was arguably only a matter of time before equal pay claims began to migrate to the private sector. Recent news that ASDA has been hit with 400 equal pay claims (and claim numbers are rising fast), suggests that this has finally happened.

So what types of equal pay claims have arisen?

There are three types of equal pay claims. First, 'rated as equivalent' claims, where a claimant can point to a comparator rated the same or lower than them under a legally compliant job evaluation scheme. Secondly, 'like work' claims, where similar roles are compared with minor differences between roles being ignored. The final category are 'equal value' claims where an independent expert is generally appointed by a Tribunal to assess whether the claims are of equal value according to objective factors.

The ASDA cases are 'equal value' claims, which can take a significant period of time to conclude. If there is a gender imbalance between the claimants and their comparators, it significantly increases the strength of the claims. In supermarkets, check-out staff and shelf-stackers are mostly women. Employees working in the warehouses are predominantly men. A Tribunal will determine if the supermarket's in-store staff jobs are of ‘equal value’ to higher-paid jobs in ASDA's male-dominated distribution centres. If there is an underlying gender imbalance, the supermarket will have to objectively justify any differences in pay. As many public sector organisations have found to their detriment, that is not an easy task!

What is the risk in this claim?

The outcome of these test cases could have significant ramifications for ASDA which employs over 170,000 employees. If the claimants are successful, workers could be entitled to six years' back pay for the difference in earnings, which could mean huge liabilities. In the public sector, equal pay claims hit Birmingham City Council with over £1 billion liability.

If the legal action succeeds, other supermarkets who also own their own distribution centres may face similar claims. Most retailers own some of their distribution centres and lease others and use a mix of directly employed and third-party staff.

What is the general risk?

Wherever there is a gender imbalance and pay differences, it is a fertile ground for equal pay claims. Airline industries, hotels and manufacturing organisations are all at risk to name a few.

In addition, the recent landmark ruling of the Supreme Court hearing involving Birmingham City Council in effect extended the time limit for equal pay claims to be brought from six months to six years after leaving employment. This has opened up the floodgates for additional claims.

What next?

If this case rings any alarm bells for your organisation it would make commercial sense to take stock sooner rather than later.

If you suspect that there may be a gender imbalance and differential in pay between different roles in your organisation then it is strongly advisable to obtain specialist advice to gauge whether you have an underlying equal pay risk. Steps can potentially be taken to mitigate any risk that does exist. The potential liability is too large to 'brush under the carpet'

If you have any questions about current or potential equal pay liability in your organisation please do not hesitate to get in touch with your usual Weightmans' contact or Jawaid Rehman jawaid.rehman@weightmans.com.

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