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14 April 2021
The Supreme Court has confirmed that retail staff of UK supermarket chain Asda can compare themselves to higher-paid distribution depot staff for the purposes of an equal pay claim.(1)
This is the latest stage in a long-running legal dispute. In 2014 more than 7,000 female Asda retail store workers brought claims in an 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 that of the distribution workers.
The Equality Act 2010 provides that men and women should receive equal pay for equal work. An employee can compare themselves to a comparator of the opposite sex who is performing work of equal value. The claimant and comparator must be in the 'same employment' (ie, they must be employed by the same employer or associated employers).
They must also be employed at the same establishment or at different establishments at which common terms apply. Thus, it is possible for a claimant to compare herself to a man doing a different job in a different location. When deciding whether common terms apply, a hypothetical question must be asked: what terms would the comparator be employed under if he transferred to do his job in the same workplace as the claimant? If his terms would not change, the jobs can be compared.
This hypothetical comparison was the key issue in Asda. The female retail employees wanted to compare their work to that of male distribution staff. Their roles were different and they were working in different places. Each of the groups of employees had negotiated and agreed separate terms and conditions of employment. No retail employees worked at the distribution depots and no distribution employees worked in retail stores. Nonetheless, the claimants argued that this was a valid comparison.
Asda argued that it was impossible to compare the roles. It contended that the distribution and retail operations were fundamentally different. Asda also argued that the hypothetical comparison of terms that a male distribution worker would have been on if he transferred to the same workplace as the claimants was invalid.
The employment tribunal decided that the retail employees could compare themselves to the distribution employees. The Employment Appeal Tribunal and the Court of Appeal also ruled that the comparison was permissible. The Court of Appeal found that there were common terms which would apply wherever employees doing that particular job worked.
The Supreme Court also decided in favour of the Asda employees and confirmed that the female retail employees could compare their pay to that of the male distribution employees. The employment tribunal had found that the distribution employees would have been employed on substantially the same terms if they had been employed at the claimants' site, and there was no reason to overturn this decision.
The Supreme Court clarified how to make comparisons between groups of employees who work in different establishments. If there are no employees of the comparator's group at the claimants' workplace, and it is unclear on what terms they would have been employed there, the hypothetical question must be asked: would the comparator have been employed on the same or substantially the same terms if he had been employed in the same role at the claimants' establishment? Put simply, would the distribution employees have kept broadly the same terms if they had moved to do their distribution work at a retail store location? It matters not that it is unfeasible in practice for distribution employees to work at a retail store, as this is a hypothetical exercise.
The Supreme Court also took the opportunity to confirm that this should not be a complex exercise and employment tribunals are not required to perform a line-by-line comparison of different sets of terms and conditions. Only a broad comparison is needed. The point of the hypothetical comparison is that otherwise an employer could avoid equal pay claims by allocating certain groups of employees to separate sites in order to give them different terms, even where this is discriminatory. The test of whether there are common terms to allow a comparison between employees is just the first step in an equal pay claim. It is a threshold test to weed out comparators who cannot be used and cases where this threshold test cannot be met are likely to be exceptional.
The Supreme Court's decision is the final word on the comparison issue but establishing that the roles are comparable is only the first step in this litigation. The case now returns to the employment tribunal, where there is still a lot to be decided – 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. The number of claimants has grown to approximately 35,000, so complex legal arguments are likely to continue due to the scale and value of the case.
The Supreme Court commented that the proceedings had become "markedly over-complicated". The Supreme Court's view is that finding common terms across different establishments should not be difficult. If employees have different terms because of the location in which they work, there will not be common terms because an employee who moves location will also move to new terms. However, if, as in this case, the core terms relate to the job rather than the location, there will be common terms wherever the work is done.
The Supreme Court provided some guidance on how to deal with this issue, commenting that "the employment tribunal should not countenance a prolonged enquiry into this threshold test". The Supreme Court confirmed that employers will have ample opportunity to show that pay differences are justified when looking at the main issues in the case. The court appeared to be signalling that parties should not waste time and resources on complicated legal arguments about comparators. This suggests that it will now be more difficult for employers to end equal pay claims by showing that the comparators chosen by a claimant are inappropriate. However, it is potentially a helpful message for both employers and employees, as equal pay claims can be notoriously slow and complex.
There was a secondary argument in this case based on EU law, which provides that EU member states must ensure equal pay for male and female workers where pay inequality is attributable to a 'single source' (eg, a parent company). The Supreme Court did not need to engage with this argument as domestic law gave the answer, meaning that further cases will be needed to see how this may apply after Brexit.
While the facts of this case are specific to Asda, the Supreme Court's confirmation that comparisons across different sites can be made relatively easily means that employers should consider their pay practices. The requirement to report annual gender pay gap statistics (now revived after a pause during the COVID-19 pandemic) may also reveal discrepancies that could be used as the basis for an equal pay claim. This decision provides an opportunity for employers to review their pay strategies and look to identify differences in pay between similar level jobs across different sites. Industries with entry level roles (where there are no skills or experience requirements) on different rates of pay will be particularly vulnerable to challenge without a material factor defence (eg, London weighting) which explains the difference in a non-discriminatory way.
For further information on this topic please contact Lucy Lewis 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.
(1) Asda Stores Ltd v Brierley – judgment available here.
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