The Manchester Employment Tribunal has held that the claimants (mainly female store employees) are able to compare themselves to Asda's mainly male distribution depot employees. Until now, significant equal pay legislation has tended to be limited to the public sector. We look at the implications of this case for other employers and consider whether this could be the first in a series of high value claims to hit the private sector.

The Asda case so far
A group of around 7,000, mostly female Asda store workers have brought an equal pay claim against their employer, arguing that their work is comparable to that of the supermarket's distribution depot workers, who are mostly male and are paid more than the store workers. They claimed that store work has been historically seen as "women's work" and therefore valued less.

Asda argued that the store workers could not rely on this comparison because they were not employed under common terms and conditions with depot workers and that as such the comparator was not valid. A preliminary hearing was held to allow the judge to decide if the comparison was valid and the claims could go ahead.

Comparisons for equal pay
In order to be a valid comparison for the purposes of the Equality Act 2010 (and Equal Pay Act 1970), as a preliminary point the employee and the comparator need to both be employed by the same employer (or by associated employers) and either work at the same establishment, or work at different establishments but under "common terms" which apply either generally between the establishments or between the group of employees raising the claim and their chosen comparators.

UK equal pay law is underpinned by European law which permits a wider range of comparators than those set out in the Equality Act, and can even include a comparison with someone who is not employed by the same employer or an associated employer provided their terms derive from a single source (for example, an industry wide collective agreement).
For the Asda case, however, there was no suggestion that there was a different employer. The key issues were whether or not the store and depot workers were employed on common terms and conditions, and also whether there was a single source responsible for determining their terms and conditions that could remove any inequality.

Reasoning of the tribunal
At the preliminary hearing, the tribunal ruled that the comparisons were on the face of it valid. They held that the employing entity (ultimately controlled by Walmart) had budgetary control and oversight of both the retail and distribution elements of the workforce, and so had the power to introduce pay equality. The tribunal also accepted that the claimants' terms were broadly similar to those of depot employees. Even though there were differences in specific terms, both sets of workers were paid an hourly rate, and their employee handbooks were structured very similarly. The tribunal also emphasised the need to discount any difference in terms which was the subject of the equal pay claims.

What next for the Asda case?
Ultimately, in view of the potential compensation and cost implications for the business, Asda is likely to appeal against the tribunal’s judgment in the preliminary hearing. If the judgment stands, the claimants will be over the first hurdle but they will still have to prove their case. The claimants must show that their work is of equal value to the comparators'. Asda will contest this and are also likely to seek to establish that there was a material factor, unrelated to gender, to justify the difference in pay between the depot and store workers. The scale of the workforce may make this a difficult task.
What if the workers succeed?

It is estimated that the 7,000 claims currently lodged are worth in the region of £100million. The claimants in the current case, if successful, would be entitled to up-to six years’ back pay prior to the date on which they raised their claims and for a pay increase going forward. If they are ultimately successful, then the remainder of Asda's 130,000 store workers, who have not claimed up to now, could file their own claims.

And it's not just female store workers who are affected: male store workers can also expect their pay to be levelled up to the level of depot workers. If this is not implemented, male store workers could bring "piggyback" claims to bring them in line with female store workers. Even employees who do not raise claims in the tribunal should benefit from any forward looking pay rise implemented by Asda to address any ongoing equal pay liability. The cost of this could quickly reach into the billions. As such, Asda may take dramatic steps to reduce the costs. One such step may be an overall pay reduction affecting depot staff to level-down pay. It is likely that such a move would also bring with it complex employment challenges from deport employees and the unions.

Implications for other employers
This is the largest ever equal pay claim case to affect the private sector, and comes as the wave of claims against the public sector is finally dying down. The lawyers of the claimants have noted that there are similar claims being brought on the same basis by workers at other UK supermarkets, so there are signs that the private sector is about to see far more equal pay claims, particularly if the claimants here are ultimately successful.

The issue is also interesting in light of the new Gender Pay Gap Reporting obligations that will be introduced next year for employers with 250 or more eligible employees. Should any large disparities between the genders be revealed, this may trigger more equal pay claims being brought against private sector employers. Employers may wish to seek advice now on identifying any risk areas within their business and if necessary any steps that could be taken to minimise the risk of equal pay claims.

Click here to access the tribunal’s judgment in the Asda preliminary hearing.
Click here to access our Quick Guide to Gender Pay Gap Reporting.