In 2016, tens of thousands of, predominately female, Asda retail store employees lodged an equal pay claim, on the basis that they should be paid the same of the predominately male distribution employees. They stated that their work was of equal value and there was no material factor justifying the difference in pay.
Before the employment tribunal could begin to consider whether in fact the retail store employees should be paid the same rate of pay as the distribution centre employees, a preliminary legal question arose, namely whether the retail store employees could legitimately compare themselves to the distribution centre employees. Had they chosen the correct comparator to make their claim? This is a term enshrined in section 79 of the Equality Act 2010, and maintains that, to bring an equal pay claim, an individual must be able to identify a more highly paid comparator of the opposite sex performing equal work at either:
- The same establishment; or
- A different establishment where 'common terms' apply, either generally or between the individual and their comparator.
Asda asserted that the retail employees could not be compared to the distribution employees as the male and female employees were in different departments and the rates of pay were set using a different method, and so they did not have common terms. They also maintained that the roles of the male employees were more difficult and that the distribution centres were located in areas with a higher average wage.
The claimant’s argument that distribution centre employees were appropriate comparators succeeded before the Employment Tribunal. Asda then unsuccessfully appealed to the Employment Appeal Tribunal and then to the Court of Appeal, and finally to the highest appeal court in the UK - the Supreme Court.
The Supreme Court dismissed Asda's appeal, confirming that the retail store employees are entitled to compare themselves to the offsite distribution staff for equal pay purposes.
To summarise some of the key points in the Supreme Court judgment:
- In interpreting ‘common terms', it is required that the terms and conditions of employment of the comparators must be broadly the same and, in absence of written terms and conditions, the Tribunal applies what is known as the North hypothetical. The North hypothetical is to ask whether, on the assumption that the comparator was employed to do his present job in the claimants’ establishment, they would have been employed on broadly similar terms.
- The North hypothetical can be applied, even where the comparators’ terms ad conditions are not fixed by collective bargaining. This was the first case where terms and conditions were not fixed by collective bargaining.
- In comparing ‘common terms', a line by line comparison of terms is inappropriate and instead a broader comparison should be implemented by the relevant parties and the courts.
What does this mean?
This case marks a win for the retail store employees, and provides much needed guidance on establishing the correct comparators, particularly where terms and conditions are not collectively bargained. However, is only the first step in what is likely to be lengthy and hard-fought litigation. It still needs to be decided whether the retail store employees are engaged to do equal work to that of the distribution employees, and, if so, whether the difference in pay constitutes unlawful sex discrimination.
Asda is not the only UK supermarket giant to face a claim in relation to equal pay disputes. Sainsbury’s, Tesco, Morrisons and Next are also embroiled in long-running pay disputes with (mostly) female shop floor employees who are claiming that their work is of equal value to work carried out by warehouse staff. Despite aspects of the case still to be determined, the Supreme Court’s judgment could be a watershed moment within the current sea of David v Goliath cases against UK’s top retailers given the findings on common terms.
Keep your eyes peeled for our next employment law update in relation to this.
How can we help?
If you have any questions about what this judgment means for you or your organisation, please get in touch with our Employment team.