Facts
Decision
Comment


The Employment Appeal Tribunal (EAT) has ruled that individuals working in Asda retail stores can compare themselves with distribution centre workers in claims for equal pay.(1)

Facts

In 2016 over 7,000 Asda employees issued equal pay claims in the Manchester Employment Tribunal. They argued that retail store workers carry out work of "equal value" to those in the distribution centres, making the latter appropriate comparators for the purposes of an equal pay claim. Store workers are predominantly women, whereas the distribution centre workforce mainly comprises men.

Asda contended that a comparison could not be drawn between the roles because:

  • the shops and distribution centres were run by different departments; and
  • the rates of pay were set using a different method.

In October 2016 the employment tribunal rejected this argument.

Asda appealed to the EAT, which has now upheld the decision, allowing the United Kingdom's largest private sector group's equal pay claim to proceed.

Decision

The EAT's judgment highlights significant points relating to comparators in equal pay claims. However, the decision will likely be appealed and is therefore unlikely to be the final word.

The EAT confirmed that the EU law principle of 'equal pay for equal work'(2) is directly effective in a claim asserting that work is of equal value. Where there is a single source of pay and conditions for both the claimant and comparator, a comparison is permitted. This negates Asda's argument that the differing methods for setting payment rates would prevent a comparison.

Further, the EAT stated that in order to establish 'common terms' for the purposes of the Equality Act 2010, the employment tribunal may consider the similarity between various terms observed at different establishments. The fact that similar terms have a different genesis and history does not prevent them from being common terms, and the employment tribunal may take into account the similarity of the terms, as well as their history. The EAT gave the example of an employer that applies men's terms to women at a different establishment to avoid discrimination, recognising that their work is of equal value.

Finally, the EAT held that if no actual comparator works at the claimant's establishment, the claimant can use a hypothetical comparator. This is known as the 'North hypothetical test'.(3) In this case, it involved the employment tribunal considering whether the distribution staff would have been employed on broadly similar terms to the staff in the distribution centre had they been employed in retail stores.

The EAT's answer was yes, thereby enabling the claimants to compare themselves to hypothetical distribution workers employed in a store. In reaching this decision, it rejected Asda's argument that the Equality Act 2010 had altered the law when replacing the relevant section of the Equal Pay Act 1970, preventing the use of North hypothetical comparators.

Comment

Given the potentially wide-ranging implications of this decision, the EAT permitted Asda to appeal to the Court of Appeal. Asda has indicated that it will proceed with such an appeal.

For further information on this topic please contact Lisa Dafydd at Lewis Silkin by telephone (+44 20 7074 8000‚Äč) or email ([email protected]). The Lewis Silkin website can be accessed at www.lewissilkin.com.

Endnotes

(1) Asda Stores Ltd v Brierley.

(2) Article 157 of the Treaty on the Functioning of the European Union.

(3) In reference to a 2009 EAT decision, Dumfries and Galloway Council v North.