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Asda case significant for employers providing different wages to their workforce

The Employment Appeal Tribunal has made a decision on the "Asda equal pay case" – and it paves the way for more than 10,000 claims to proceed.
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Asda’s shop floor workers can compare their jobs for the purposes of an equal pay claim with those done predominantly by men for a higher wage in Asda’s distribution centres, the Employment Appeal Tribunal (EAT) has ruled.

The EAT judgment could see more than 10,000 equal pay claims lodged against the retailer. If the claims succeed, Asda will be forced to adjust the pay of many of its retail store workers, who typically earn between £1 and £3 less than workers in its distribution centres. In addition, it would have to make back payments going back to 2002 to those workers, which could exceed £100m.

Under the Equality Act 2010 women and men should receive equal pay for equal work. In the Asda case, the claimant shop floor workers – who are predominantly female – have argued their work is of equal value to that of male distribution depot workers.

A preliminary issue which needed to be determined to allow the claimants to proceed to the next stage of their equal pay claim was whether the retail workers could use the distribution workers as valid comparators.

The Equality Act 2010 requires claimants and comparators to be in the “same employment”. That is, they must be employed by the same employer or associated employers, either at the same establishment or at different establishments with common terms. Because the claimants and potential comparators worked at different locations, the claimants had to establish that common terms applied to both groups of employees.

On this point the EAT held that the tribunal was entitled to take into account the broad similarity of terms between workers at the different retail and distribution establishments and to reach the conclusion there were common terms.

A further basis upon which the claims were allowed to proceed was that, under EU law, the claimants were allowed to use the distribution centre workers as comparators if they could demonstrate the pay inequality was attributable to a “single source,” which could restore equal treatment.

The EAT agreed with the tribunal’s finding that Asda’s executive board was the single source of pay and conditions for both groups, it was responsible for the alleged inequality and could introduce equal treatment. The EAT further agreed that the presence of a single source of pay and conditions was sufficient by itself to permit a comparison between the retail and distribution workers.

The EAT judgment represents a significant victory for the claimant retail workers, who were represented by the GMB union, and whose equal pay claims have been permitted to proceed. Perhaps unsurprisingly, given the potentially vast sums at stake, Asda intends to appeal the EAT decision to the Court of Appeal.

The question of whether the distribution centre workers are suitable comparators for the retail workers’ equal pay claim is only a preliminary issue. An employment tribunal has yet to consider whether their jobs are actually of equal value.

It will then have to consider the reasons for the pay differentials, including arguments about the existence of different market rates between the retail and distribution sectors. The case therefore potentially has a long way to run before a final decision is made, and it appears that Asda is prepared to fight every step of the way.

The EAT’s ruling will be significant for any employers who provide different rates of pay to different parts of their workforce. It is likely to make it easier for female staff to compare themselves with men carrying out different work, even if they are based at different locations and within different sectors of the business.

Chris Weaver is an employment law associate at Payne Hicks Beach.

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