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ASDA employees win the battle, but not the war

15th April 2021

In the long-awaited judgment of Asda Stores Ltd v Brierley and ors (2021) UKSC 10, the Supreme Court has ruled in favour of the Claimant employees on a preliminary issue. In this case, the Claimants were retail employees (predominantly women) who sought to compare themselves to (predominantly male) employees working at Asda’s distribution depots who earned more than them per hour.

In this article, Michelle Chance (Partner and Head of Employment) and Choy Lau (Senior Associate) summarise the findings of the Supreme Court and discuss what this might mean for employers looking to defend similar equal pay cases in the future.

Background

The case started in 2014. Over 7000 (mostly female) employees working at Asda’s retail stores brought equal pay claims against Asda, claiming that they earned less than employees working at Asda’s distribution depots, who were predominantly male. In this case, the Claimants were unable to point to a comparator working at the same establishment as themselves, since all of Asda’s retail staff were employed on the same terms. However, in addition to retail stores, Asda also operates several separate distribution depots and the distribution employees, who are predominantly male, are employed on better paid terms.

Under s.79 Equality Act 2010, a Claimant (A) can compare her pay with a comparator (B), who works at a different establishment if “common terms apply at the establishments (either generally or as between A and B)”.

Asda applied to dismiss the Claimants claims on the basis that distribution staff were not appropriate comparators because they were employed at a different location to the retail staff and were not employed on “common terms” to the retail staff. Distribution staff had different terms that were collectively bargained through the GMB union, following national recognition agreements.

The Employment Tribunal held that the Claimants and the distribution employees had a single source of terms and conditions between them i.e. their terms of employment were determined by Asda Stores Limited’s executive board and their terms and condition of employment were broadly similar so as to constitute “common terms”. Asda unsuccessfully appealed to the Employment Appeal Tribunal, then the Court of Appeal, and now the Supreme Court has also rejected their appeal.

Decision

The Supreme Court, dismissing Asda’s appeal, confirmed that the Claimants are entitled to compare themselves to, better paid, distribution staff.

The correct approach to take to determine whether a comparator based at a different location is employed on “common terms” was not a line-by-line comparison of the specific terms and conditions of the retail employees on the one hand and distribution employees on the other hand, but rather to ask whether a distribution employee would have been employed on broadly similar or substantially the same terms if he had been employed at the same site as the retail employees.

The purpose of the “common terms” threshold was to “weed out” claims in which a comparison is one that cannot realistically be made. Lady Arden, who gave the leading judgment, stated that “cases where the threshold test cannot be met are likely to be exceptional”.

What does this mean for Asda and other employers?

The Claimants have not succeeded at this stage in their equal pay claims. Now that the preliminary issue of whether they can rely on distribution staff as “comparators” has been determined in their favour, their claims will proceed in the Employment Tribunal.

The Employment Tribunal will need to decide whether the work the Claimants performed was like work, work related or equivalent to, or of work of equal value, to that of the distribution employees. If they are successful on this point, Asda may still be able to successfully defend the claim if it can show that the difference in pay was due to a genuine material factor which was not itself discriminatory on the grounds of sex, such as geographical location.

The Supreme Court’s judgment has made it clear that the “common terms” threshold test is one that is easily met and should not be a major hurdle to bringing equal pay claims. This may encourage other individuals to pursue similar class action claims, especially in the retail and manufacturing industries where male dominated roles are generally paid more than female dominated roles.

Other employers should take note of this judgment and review their pay practices. Where they are able to identify groups of predominantly male employees being paid more than groups of predominantly female employees, they should determine the reason(s) for the difference in pay and seek advice on whether their pay practices could be discriminatory on the grounds of sex.

Employees can claim back-pay of up to six years from the date that they issue proceedings and so the financial impact of successful claims against employers can be very high, especially in cases where there is a group action (as in the Asda case).

At Rosenblatt Limited, our specialist Employment Team advises both employers and senior executives. If you are affected by any of the issues arising in this blog, please do contact us.

Michelle Chance is a Partner and Head of Employment and Choy Lau is a Senior Associate at City Law Firm Rosenblatt Limited.