A recent decision by the Supreme Court in Asda Stores Ltd v Brierley now means that retail employees can be compared to distribution employees in equal pay claims made under the Equal Pay Act 1970 and Equality Act 2010 (EA 2010). The case involved some 35,000 claimants, mostly female shop floor workers, who argued that their work was as integral to the store’s business as their male counterparts working in the distribution depots and that they should be compensated accordingly. In coming to their decision, the court applied the ‘North hypothetical’ from Galloway Council v North, which meant that a claimant could compare their own pay to another employee working in a different part of the business, providing that the latter would have been employed on broadly similar terms if they had worked on the same site.
The threshold requirement for equal pay claims to be brought is that claimants must be able to compare themselves to a valid comparator.
The comparator can be:
- A real person employed by the same employer;
- A real person employed by an associated employer or;
- A real person based at another business if “common terms” apply to both parties (Section 79(4)(c) EA 2010)
However, the terms do not need to be identical, but merely common in nature and effect.
In 2016, some 35,000 staff employed by Asda Stores Ltd brought a tribunal case claiming that they were significantly underpaid in comparison to their counterparts who worked in the distribution depots. The vast majority of the claimants were female and their comparators were mostly men employed at Asda’s various distribution centres.
Asda argued that the comparisons were immaterial as they involved two groups of employees working in different parts of the business, where the rates of pay were set using different methods. Depot workers belong to the GMB union and their favourable terms were essentially a result of union bargaining. The retail workforce, however, was not heavily unionised and their terms are not set through collective bargaining. The employment tribunal rejected Asda’s arguments. The employment judge pointed to the fact that Asda’s executive board exercised budgetary control and oversight over both the distribution and retail sites at all times. He also ruled that there were ‘common terms’ between the two groups and that their differences were not so extensive as to undermine that broad comparison. Asda appealed the decision at the Employment Appeal Tribunal and the Court of Appeal, but were ultimately unsuccessful.
Asda then appealed the decision at the Supreme Court. The court agreed with the reasoning of the lower courts and reintroduced the ‘North hypothetical’ principle (cited in Galloway Council v North ). They considered whether the depot workers would have been employed on broadly similar terms had they been employed to work at the retail sites. The 3 judges all agreed that they would have been. However, the claimant’s would still need to show that they performed work of an equal value for their claim to succeed. The decision of the court outlined what the test was but each case would still be decided on its facts. Asda could still rely on a number of defences, including that the differences in pay were due to the value or hardship of the work and not discriminatory in nature.
Whilst the practical effects of this decision are still unclear, it will certainly serve as a wakeup call to large businesses who segregate their workforce in different sites, whilst operating differential pay between male and female staff in different sites. A potential claimant can now compare their pay terms to a person working on a completely different side of the business or geographic part of the country. However, the decision has only established the first part of the test and the Asda retail claimants must still show that the work that they carry out is of equal value. The decision has certainly brought clarity to the ‘common terms’ issue in the EA 2010 and the threshold is now certainly a lower one. Along with the introduction of gender pay gap reporting, this new development is certainly a step further in redressing the pay imbalance between male and female employees.