The big four supermarkets: Tesco, Sainsbury’s, Asda and Morrisons are all currently facing equal pay cases. The firm Leigh Day is representing thousands of employees seeking back pay for predominantly female retail workers who believe that they are receiving less pay then predominantly male workers in distribution centres. It is estimated that if all four supermarkets lose their cases they could be ordered to pay over £8billion in compensation.
What are the requirements for an equal pay claim?
The basic principle of equal pay legislation is that employees should receive equal pay for equal work. This is achieved by the law inserting a “sex equality clause” into all employment contracts to replace an employee’s less favourable term(s) with the equivalent more favourable term.
There are two main legal hurdles before a claim can be successful. The questions to be asked are:
- Are the employees carrying out equal work?
There are three types of equal work, “like work”, which is work that is the same or broadly similar, “work rated as equivalent”, which is where an employer has carried out a job evaluation scheme and rated the roles as equivalent, and “work of equal value”. The last category is the basis for most equal pay claims, and forms the basis of the supermarket claims. This is where the work is different but nevertheless equal in terms of the demands made on the employees. The retail workers in the supermarket claims are arguing that their roles are of equal value and involve similar demands as roles in the distribution centres which are subject to higher rates of pay.
The supermarkets have argued that these roles are in fact completely different and the roles in the distribution centres are much more physically demanding and thus attract higher remuneration.
- If they are of equal value, is there a material factor defence?
Even if the work is of equal value, the employer may have a defence if they can show that the difference in contractual terms is due to a material factor which is neither directly nor indirectly sex discriminatory. A factor that is ostensibly gender-neutral but which, in practice, has a disproportionate adverse impact on women will need to be objectively justified by the employer. For example a common material factor relied upon by employers is market forces, that to recruit a candidate they had to pay a higher rate due to their position in the market.
What is the current position in the cases?
The Asda case is by far the furthest along which means it will carry a lot of influence in the other cases. It is also the largest with 27,000 shop floor workers claiming they have not received equal pay to their male counterparts. In the Employment Tribunal and the Employment Appeal Tribunal it was decided that lower paid shop floor workers can compare themselves to higher paid workers in distribution centres.
If the employees are ultimately successful in the Asda case this will send shockwaves across the retail sector. The implication for UK business will be far reaching as it may trigger various cases against employers for work which may not be similar but is of equal value. Unfortunately, this area of law is not clear cut and each case will very much depend on its facts.
Morrisons is the latest supermarket to face a claim from its shop workers, currently valued at around £1bn, although this is at the very early stages. This is a big blow for Morrisons who are already potentially facing a big compensation pay out due to a data breach which revealed sensitive information of employees. See our blog on this here.
Beyond legal arguments in this case, there is a lot of support for the workers influenced by a political push for equality.
While we await the ruling in these equal pay cases, employers should review their pay structures and consider their risk for claims based on the equal value of roles, and look to address inequalities if these are identified, or consider how these can be justified by a material factor.
If you are concerned that you may be similarly affected please contact me.
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