Legal lowdown: the Asda equal pay case
Stephanie Creed, July 22, 2016
Retailer Asda faces the largest equal pay action in the private sector to-date, so what does this landmark case mean for other employers?
The retail chain Asda is facing a group equal pay claim which constitutes the largest equal pay action in the private sector. The claimants, from the mostly female Asda shopfloor staff, have alleged that they are underpaid compared to their mostly male counterparts who work in Asda's warehouses. Initially around 400 test cases were lodged, but at last count, the number of formal claims stood at 7,000. The claimants' position is that their jobs involve similar duties and, while not the same, have equal value.
Equal pay: a brief explanation
Equal pay claims cover basic pay and overtime rates, pay progression, holiday and sick pay, pensions and performance-related pay and bonuses. There is some overlap with discrimination / equality legislation, and claimants sometimes bring claims of both types.
Equal pay legislation works by treating 'equality clauses' as incorporated into employment contracts. These clauses apply where the employee is employed to do 'equal work,' giving the benefit of more favourable terms enjoyed by other employees on the basis of their gender unless the difference is due to a non-discriminatory material factor. 'Equal work' means (i) like work, (ii) work rates as equivalent, or (iii) work of equal value, and it is point (iii) that the claimants are relying on here.
Equal pay claims are ordinarily brought in the employment tribunals, which have the power to require backpay or damages and/or make a declaration of employee's rights.
- This is the largest equal pay action in the private sector (to-date high-value claims have emanated from the public sector, such as the recent Birmingham City Council settlement of reportedly around £1billion).
- There are a large number of claims waiting in the wings – the claimants' representatives say they have been approached by over 19,000 other potential claimants.
- If Asda loses, it could be forced to pay affected staff the difference in earnings going back six years and there may be additional reputational damage. Asda may also be required to complete an equal pay audit of its workforce.
What are the implications?
If the claims are successful, or alternatively if they are unsuccessful but the judge implies that a similar claim may succeed, other employers may face claims and particularly those who own their own distribution centres (common for example in the supermarket sector). Sainsburys already faces an equal pay claim and reportedly settled claims as early as the 1980s.
This case has wider implications for the retail sector; there are obvious parallels for companies who have shopfloor and warehouse staff with different gender groups and pay. However, it is easy to see where this principle could be extended; as between online and shopfloor retail staff for retail businesses with separate online and bricks-and-mortar activities, for example.
With the recent introduction of the National Living Wage alongside unsteady profits, and increasing challenge from online-only and overseas businesses, the traditional bricks-and-mortar retail sector is facing an already tough future. Adding these claims into the mix, along with the potential negative publicity and brand damage, won't help matters.
What should employers do?
Employers should get ahead and assess whether there are any risk areas regarding pay. They should be carrying out pay audits and paying particular attention to pay rates where there is a concentration of one gender, and areas where men and women carry out the same or similar roles with different rates of pay. If there are differences in pay, bonus or other remuneration, employers should consider whether those differences are attributable to gender.
With the introduction of gender pay reporting in April 2017 meaning more information on gender pay is available, this thorny issue is only likely to pick up steam.
Stephanie Creed is associate in the employment, pensions and mobility group at Taylor Wessing