Tesco has argued that equalising pay between store workers and warehouse staff would ignore “economic reality” and risk causing “serious damage” to the business, as it continues to fight a long-running equal pay claim.

According to the Financial Times, the supermarket made the argument at an employment tribunal in Reading on Friday, where it set out its defence against claims that shop workers have been paid less than employees in its distribution centres.

The case centres on pay differences that can see store staff earn up to £5.50 an hour less than warehouse colleagues.

The claim, which began in 2018, involves around 60,000 Tesco workers and seeks up to six years of back pay covering the period from 2012 to 2018.

Leigh Day, which represents around 17,000 current and former Tesco employees, has previously estimated the value of the case at around £4bn. Tesco has said the potential cost could be £1.7bn across 250,000 workers.

The legal action forms part of a wider wave of equal pay disputes across the UK grocery and retail sector, with Asda, Morrisons and Next also facing claims over pay differences between shop floor and distribution roles.

The Tesco claim argues that store workers, most of whom are women, have been paid significantly less than staff in the retailer’s distribution network, where close to 90 per cent of employees are men.

At the tribunal, Tesco relied on a “material factor” defence, under which it must show that any pay gap was not caused by gender.

In written submissions, the supermarket described the case as “extraordinary” and said the pay differences reflected market conditions and “genuine pressing operational needs”.

Tesco said the pay structure was shaped by “commercial and operational judgements” required for a company of its size to remain “viable, competitive and able to continue employing hundreds of thousands of colleagues across the UK”.

The retailer also warned that a ruling against it could create major disruption, including potential industrial action among warehouse workers and a situation where some staff could be paid more than their managers.

Tesco said in its submission: “Tesco submits that, the law not being an ass, this is not an outcome that should ever be reached. But this is that for which the Claimants nonetheless contend.”

Leigh Day employment partner Paula Lee said Tesco was expected to rely heavily on market rates to justify the pay differences.

However, she said: “Our clients’ case is that those markets are not neutral or external forces operating beyond Tesco’s control.

“It is alleged that Tesco had substantial influence over how pay was set and operated within a system that it helped shape over many years.”

The hearing is expected to last five weeks, with a decision due later this year.

A separate equal pay case against Morrisons began this week in Leeds, while Next is continuing to challenge elements of a 2024 tribunal decision that partly went against the retailer.

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