Last week, Asda’s appeal in relation to an equal pay case was brought forward by 40,000 shop floor workers was dismissed by five Supreme Court judges.
The UK’s top court ruled that shop staff were entitled to compare themselves to colleagues at distribution centres for equal pay purposes – marking a key victory for Asda shop workers in their long-running dispute for equal pay.
The first employment tribunal which led to this legal action took place almost five years ago in June 2016. The employment tribunal had decided that Asda store workers, most of whom are women, were entitled to compare themselves to distribution staff, most of whom are men. That decision was subsequently upheld by Court of Appeal judges in 2019.
However, Asda appealed to the Supreme Court, which it lost last week when all judges unanimously ruled in favour of store workers.
Asda argue that physical working environments between retail and distribution staff is different, while the claimants – the shop workers – believe the work provides the same level of value to the grocer.
The store workers, who had the help of legal representation from law firm Leigh Day, argued that they were historically paid less because most store workers are women while most distribution depot staff are men. The lawyers also said distribution depot workers receive between £1.50 and £3.00 per hour more compared to shop floor colleagues.
“The victory is a huge step forward in the fight for gender equality,” Lauren Lougheed, the Leigh Day partner representing Asda store staff, told Retail Gazette.
“It means that companies cannot rely on the fact that workers are in two different locations to avoid the protections afforded by the Equality Act.
“In its decision, the Supreme Court talked about the progress equality law had made overall, as well as what should happen in this particular case.
“It looked at all the laws that have been introduced about pay gap reporting, and enforcing equal pay judgments, and concluded that at a time when Parliament is determined to make equal pay law more effective, now is not the time to take its ‘foot off the pedal’.”
An Asda spokesperson told Retail Gazette that it continues to contest the claims being made by the shop workers because “retail and distribution are two completely different industry sectors”, and each have their own skill sets and rates of pay.
“This ruling relates to just one stage of the equal value process and is not the conclusion of the case,” the spokesperson said.
“At Asda, male and female colleagues doing the same jobs in stores are paid the same and this is equally true in our distribution centres as well.”
Asda’s spokesperson went on to stress that “equal value” should not be confused with gender pay equality, as “the two are completely separate.”
Nonetheless, Lougheed said this was the first time the Supreme Court has considered this type of equal pay claim and that the decision was “an important victory” for Asda shop workers and equality law.
“It makes it harder for companies to rely on the fact that workers are in two different locations to avoid paying them equally,” she said.
“The judgment makes it clear that the purpose of the legislation is to allow these types of comparisons and not to try and prevent them.”
However, the fight is not yet over.
Leigh Day said the next step would involve an employment tribunal deciding whether specific store and distribution jobs were of “equal value”. Even the Supreme Court’s Lady Arden said the claimants had to prove they performed work of equal value.
If employment tribunal judges decided that different jobs were of “equal value”, the litigation would then enter a third and final stage. There, Asda would have a chance to argue its reason (or reasons) other than gender difference for why shop floor and distribution staff are paid differently.
All in all, there are three stages in equal pay action:
- Are the jobs comparable?
- If the jobs are comparable, are they of equal value?
- If they are of equal value, is there a reason why the roles should not be paid equally?
Should the full process of the litigation conclude that the roles are of equal value and Asda does not have a reason for the pay disparity, then the Big 4 grocer would likely have to pay each of the claimants up to six years back pay.
“We are confident about the next two stages of the claim and believe that the average store worker could be entitled to in excess of £10,000,” Lougheed said.
“The overall value will go up as Asda continues to fight the claim, as our clients who still work for Asda are paid less than men in the depots.”
“The victory is a huge step forward in the fight for gender equality”
Samantha Silva, head of retail UK at recruitment firm Quest Search & Selection, said the case begs the question as to why there is not more proactive recruitment with getting more men on the shop floor and more women in the warehouse.
“Gender equality starts at the grassroots and not just something that needs addressing in the boardroom,” she told Retail Gazette.
Retail expert Nelson Blackley highlighted that despite the Supreme Court victory, no change is to be expected in the short term. He said this was just another – although important – step in a lengthy legal process.
However, he added that it could be seen as one step closer to these retail employees achieving equal pay.
“The Supreme Court’s conclusion doesn’t mean the Asda employees have won their equal pay claims,” he said.
“All that has been determined – although it’s a very important judgment in their favour – is that they can use terms and conditions of employment enjoyed by the distribution employees as a valid comparison.”
Blackley predicted that the final outcome of this case will have far-reaching implications for equal pay claims for the retail sector and beyond.
“HR and legal teams from all the major retailers will be following every stage of this case very closely,” he said.
Similar equal pay claims have also been made by shop floor staff at Tesco, Sainsbury’s, Morrisons, and Co-op, all of which are still ongoing and all of whom are being represented by Leigh Day as part of the firm’s Equal Pay Now campaign.
The total estimate of the claims against all supermarkets, if they lose, could be more than £8 billion. This could have huge potential implications for all retailers who have their own distribution centres.
Tesco is currently fighting an equal pay claim that argues that its store workers, who are predominantly women, are being paid up to £3 less per hour than its warehouse and distribution centre colleagues, who are mostly men.
The claim has been put forward by the Tesco Action Group, which claims thousands of current and former workers could be entitled to back pay worth up to £10,000 each. If the claim is successful, Tesco could be forced to pay out more than £2.5 billion.
The case by thousands of Sainsbury’s store workers also asks to be put on an equal footing with colleagues in other parts of the business. Despite working on the shop floor and interacting with customers, Sainsbury’s shop workers are still allegedly paid less than their colleagues in warehouse and distribution centres.
Hundreds of Morrisons shop workers have also demanded equal pay much like other Big 4 grocery employees, while Co-op submitted its own equal pay claim with Leigh Day and if successful, shop floor employees could receive a pay rise.
“Gender equality starts at the grassroots”
Even fashion retailer Next was dragged into an equal pay case after shop floor staff submitted hundreds of claims to the Employment Tribunal. Staff at Next stores across the country, most of whom are women, allege that they are paid on average at least £2 less per hour than their colleagues in distribution centres, the majority of whom are men.
“Any final legal decision is of huge financial importance for the retail industry as within the grocery sector alone, if the largest five supermarkets are ordered to pay all eligible staff, lawyers have estimated the costs could be anywhere between £8 billion and £10 billion,” Blackley said.
“Legal experts have said that if Asda store workers win all further stages of their fight, their employer could be forced to pay out as much as £500 million as they could be entitled to several years’ back pay and it’s estimated each employee involved might obtain compensation of between £10,000 and £20,000 each.”
Although it’s mostly supermarkets currently in the firing line, other retailers can also expect employees to look at pay differences, particularly in the wake of legally-enforced gender pay gap reporting. However, the fact there is a gender pay gap does not mean that there is an equal pay issue. The gender pay gap looks more at the overall spread of pay.
A negative gender pay gap may reflect the fact that there are more men in senior positions than women, whereas equal pay is designed to ensure that men and women are paid equally for the same work – work that is rated as equivalent or work of equal value.
“If the retail sector wants to continue to recruit high quality staff then it does need to demonstrate that pay rates for all roles are both reasonable for the work involve and equitable,” Blackley said.
“A final victory by these Asda store workers shouldn’t make any difference to recruitment but of course if Asda, or any other retailer, have to make significant back payments and increase their pay rate for tens of thousands of staff, then that would hit their cost base, which could in turn potentially impact their future investment in new stores, new jobs or staffing levels.”