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13 March 2019
The Court of Appeal has upheld an Employment Appeal Tribunal (EAT) decision that Asda's lower-paid, predominately female retail staff can compare themselves to higher-paid, mainly male, distribution depot staff. The Court of Appeal decision is the latest in this long-running legal dispute over equal pay. In 2014 over 7,000 female Asda store workers brought claims in the employment tribunal arguing that they were entitled to equal pay with male distribution depot staff, on the basis that their work was of "equal value" to male workers.
The Equality Act 2010 provides that men and women should receive equal pay for equal work. Under the act, an employee can claim contractual terms equal to those of a comparator of the opposite sex employed in the same employment and performing:
The claimant and comparator must be in the same employment (ie, they must be employed by the same employer or associated employers, either at the same establishment or at different establishments at which common terms apply).
Unlike other types of discrimination, in an equal pay claim, the claimant must have an actual comparator, not a hypothetical one. However, case law has established that a man doing the same job as a female comparator does not actually have to work at the same place as the woman – it is enough that had he been transferred to do his job in the same establishment he would have remained employed under the same terms (the so-called 'North hypothetical').
Alongside these domestic provisions, where the comparator is not in the same employment as defined by the act, employees can rely on Article 157 of the Treaty of the Functioning of the European Union (TFEU). This provides that EU member states must ensure the principle of equal pay for male and female workers for equal work or work of equal value where pay inequality is attributable to a single source.
The female retail workers claimed that their work was comparable with male distribution staff's work even though, on the face of it, the roles were quite different and they were working in different establishments. Asda claimed that its distribution and retail operations were fundamentally different, having evolved differently over time and with different objectives, physical environments and terms. Asda also argued that the North hypothetical should no longer apply, and that Article 157 could not be relied on as having direct effect in equal value claims. As a result, it argued that there was neither a single source nor common terms.
Asda's case was rejected at a preliminary hearing before the employment tribunal and before the EAT (for further details please see "Retail workers comparable to distribution centre workers for equal pay claim"). Asda appealed to the Court of Appeal.
The Court of Appeal upheld the EAT decision. It decided that the North hypothetical was a binding authority and, in relation to the interpretation of domestic law, there were common terms between the distribution depot workers and the retail workers.
The employment tribunal had analysed the differences and similarities between the claimants' and comparators' terms in great detail. However, the Court of Appeal held that this approach was incorrect. Rather, the comparison should have been between the terms applicable to each job, whether a claimant or comparator, at the various establishments where people doing that job work.
Because the appeal succeeded on the analysis of the application of domestic legislation, it was not necessary to consider EU law. However, the Court of Appeal agreed that there was a single source under the TFEU. In this case, Asda's executive board was capable of rectifying the inequality between the retail workers and the distribution workers. The Court of Appeal recommended that if the decision is appealed to the Supreme Court, the application of Article 157 to equal value claims should be referred to the European Court of Justice (ECJ).
Equal pay litigation is notoriously complex. With the number of claimants now standing at around 30,000, this case is bigger in scale and potential value than most employment cases.
While the Court of Appeal's decision resolves the existing confusion about with whom comparisons should be made, establishing that the roles are comparable is only the first step in this litigation. Asda may well appeal to the Supreme Court and, if the case is referred to the ECJ, Brexit could have implications (depending on the post-Brexit jurisdiction of the ECJ) – although the EU (Withdrawal) Act will allow for single source arguments to be made under domestic law. Even when the case returns to the employment tribunal, there is still a lot to be decided (eg, whether the roles are of equal value and, if so, whether any difference in pay is attributable to a material factor that is not sex discriminatory).
While the facts are specific to Asda, any employer with different groups of predominantly male or female workers should review its pay practices, regardless of whether these groups work at the same site. The intensive activity by many employers over the past couple of years to report on their gender pay gap and analyse the reasons for it has shone a light on pay discrepancies between groups of workers. Employers are well advised to consider whether any highlighted discrepancies are justifiable and, if they are not, to take action to address them.
For further information on this topic please contact Amy Nevins at Lewis Silkin by telephone (+44 20 7074 8000) or email (email@example.com). The Lewis Silkin website can be accessed at www.lewissilkin.com.
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