Are collective equal pay claims a step closer for private sector employers?
Has a new wave of large-scale equal pay claims, this time in the private sector, moved a step closer? Sarah Lamont reports on a decision in the current collective action against Asda.
The Equality Act 2010 requires that men and women employed at the same establishment receive equal pay for equal work: an apparently simple concept.
However, this encompasses not only the 'same' work but also work 'rated as equivalent' and work of 'equal value', i.e. work which is similar in terms of the demands made on the employee and factors such as effort, skill and decision making.
Furthermore, not only is a comparison required within a single employer or associated employers; but workers' terms and conditions must also be attributable to a 'single source', so that a single body is responsible for the inequality and can restore equal treatment.
If a gender disparity in pay is found between employees undertaking the same work or work of equal value, then the employer may be able to run a 'material factor defence': any difference in pay 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 must be objectively justified by the employer, who would need to show that the difference in pay is a proportionate means of achieving a legitimate aim.
Up until fairly recently, there have been widespread and large-scale equal pay claims against public sector organisations, with the private sector remaining unaffected. However, in Brierley v Asda Stores Limited, a large group of mainly female shop workers, employed by Asda Stores Limited (Asda), are bringing claims for non-payment of equal wages compared to Asda's distribution depot employees, who are mainly men.
The female shop workers are arguing that, historically, their work been categorised as ‘women’s work’ and thought to be worth less than the work undertaken by the mainly male workforce at the depot.
Before this litigation could get off the ground, an employment tribunal had to consider, as a preliminary point, whether employees at Asda's retail stores could use employees at Asda's distribution depots as comparators for the purposes of equal pay claims.
An employment tribunal has decided that the Asda store workers can make such a comparison. The full transcript of the decision (which runs to over 50 pages) is available here.
The tribunal decided that, although the employees in question worked at different geographic locations and within different divisions of Asda's corporate structure, there was a 'single source' of terms and conditions: a single employer has allocated responsibility to different internal structures for the purposes of setting terms and conditions, but reporting in to Asda's Executive Board.
The tribunal went on to find that there were also 'common terms' between Asda's retail stores and the depots. Asda had argued that there are differences, because the respective groups of employees are employed under different employment arrangements at its stores and depots and worked at different locations. Although the tribunal noted that there were some differences between regimes for retail workers and depot workers, it found that there was a broadly a significant correlation or comparison as between the terms of retail and distribution staff. The tribunal was also persuaded by the fact that there were strong similarities in handbooks and both classes of employee were hourly paid. So, although there were some differences, the tribunal did not feel that they were so extensive as to undermine the broad comparison that has to be made.
There are 7,000 claimants in the action against Asda, and the total value of compensation which may be payable is estimated at over £100million. No doubt other retailers, and claimant solicitors looking to following suit, will be watching the progress of this case very closely.
Although this decision gives the green light for the next stage of proceedings, the claimants still have many hurdles over which they will have to jump in order to be successful. Even once this case reaches a final hearing, it may be that Asda will be able to show that there is a 'material factor' (see Background above) which explains the difference between depot and retail work and which is not related to gender – for example, market rates for depot workers being higher than shop workers' rates.
However, if the material factor defence succeeds, then Asda may have to justify any indirectly discriminatory effect of different rates of pay, even if they are dictated by market forces. As explained above, Asda would need to show that this could be justified as a proportionate means of achieving a legitimate aim. It appears that Asda are likely to cite the more difficult and uncomfortable working conditions at their depots, additional skills required and unsocial hours.
Unlike many retailers, Asda does not outsource its distribution arm, otherwise this could have provided a way in which it could have avoided these claims. Other employers with directly employed logistics operations will need to follow the progress of the case against Asda closely, and may wish to consider taking advice now on their risks and options (preferably under the protection of legal professional privilege).
We have a wealth of experience of working with clients defending both individual and collective equal pay claims; we were at the forefront of defending the recent raft of large-scale equal pay claims against public bodies. If you would like any further information, please do contact me, or your usual Bevan Brittan contact.