On 26 March 2021, the Supreme Court (SC) gave its decision in the long running Asda equal pay case, resulting in Asda bosses losing the first stage of their appeal to the Supreme Court in an equal pay claim brought by shop workers.
This decision could have far reaching consequences for the retail sector, with other big-name stores such as Sainsbury’s, Tesco, Morrisons and Next, defending similar claims.
How did the Equal Pay Claim Occur?
In 2016, thousands of predominantly female staff took Asda to an Employment Tribunal, claiming that their work was of equal value to that of predominantly male staff working in its distribution centre. They argued that because their work was of equal value, they should receive an equal rate of pay.
Asda has argued that the roles cannot be compared with each other as they are in different departments and the rates of pay were set using a different method. It said that the daily roles of the two groups were different, with the roles of the distribution staff being more difficult. They also said that distribution centres were located in areas with a higher average wage.
The Employment Tribunal rejected Asda’s defence and agreed with the Claimants that the roles could be compared with each other. This was upheld by the Employment Appeal Tribunal (EAT). In 2019, the Court of Appeal also held that shop workers could compare themselves to distribution staff.
The Supreme Court Decision
The SC has ruled that shop workers, who are mostly women, can compare their work to those in the distribution centre for the purposes of equal pay. The essential question that was being determined was whether the “common terms” requirement of the equal pay legislation was satisfied.
The SC clarified that shop floor staff and distribution workers can be compared with each other even if the two groups are not based at the same establishment. It said that this was important, as an employer could otherwise avoid equal pay claims by allocating certain groups of employees to separate sites so that they can have different terms even where this is discriminatory. Asda applies common terms and conditions to its staff wherever they work and there is a single source for the terms that apply to staff.
The SC provided guidance for future equal pay cases involving similar preliminary issues over the common terms requirement, acknowledging that the case had become “markedly over-complicated”:
- It is a threshold test only. Tribunals should not tolerate a prolonged enquiry into it and appeals are to be discouraged.
- Inference from the facts and circumstances may more readily provide an answer to the test than the opinions of individuals employed in the business. There is no requirement for any form of line-by-line comparison of different sets of terms and conditions.
- The threshold test should not be elevated into a major hurdle nor used as a proxy for other elements of an equal pay claim. Cases where the threshold test is not met are likely to be exceptional.
The First Hurdle Complete, What’s Next?
The SC decision is essentially the first hurdle that the Claimants needed to get over in this complex litigation that has already been occurring for 5 years. The SC emphasised the threshold nature of the common terms test and the inappropriateness of using a preliminary issue to determine the substantive issues in a case. The SC decision shows that firm case management is needed where it may be in an employer’s interest to delay the determination of substantive issues.
Asda maintains that retail and distribution are different sectors with their own distinct skill sets and pay rates. The next stage of the litigation will look at this in more detail when an Employment Tribunal will need to consider whether the work is of equal value in terms of skills and training.
The SC decision does not mean that the Claimants have won the right to equal pay. The next stage in the litigation requires the Claimants to demonstrate that their roles are of equal value to the roles in the distribution centres. If the Claimants can establish this, they will then need to demonstrate that gender is the key reason why pay is different. If the claims ultimately succeed, retailers could be looking at multi-billion-pound compensation costs. With so much at stake it is perhaps unsurprising that Asda have taken such a robust approach to the defence of the claims.