The EAT had held that predominantly female Asda supermarket employees can compare themselves with a mainly male group of distribution employees in an equal pay claim of work of equal value.
The Asda equal pay case is the biggest private equal pay claim to date, with many millions of pounds at issue. The EAT judgment considered below, about comparators in an equal value claim, is just the latest chapter of the long running claim. Around 7,000 hourly paid supermarket employees, nearly all of whom are women, have brought equal pay claims against Asda, on the basis that they perform work of equal value with hourly paid distribution workers based at depots. The distribution workers are nearly all men, and are paid more.
At a preliminary hearing, a tribunal judge held that this comparison was permitted. Asda appealed this finding on the grounds that:
Article 157 of the Treaty on the Functioning of the European Union (the "TFEU"), which establishes the principle that a worker is entitled to equal pay for equal work, does not have direct effect in equal value claims such as these.
The judge had incorrectly applied EU law on the existence of a "single source" of pay and conditions of employment for both claimants and comparators. In claims brought under the TFEU, any differences in pay must be attributable to a "single source" because, without a single source, there would be no single body responsible for any inequality in pay or capable of remedying it.
The judge had not properly applied domestic law on the comparison of terms between the female supermarket claimants and the depot comparators. (Under UK equal pay legislation, if the employees work at different establishments but share the same employer, common terms and conditions must apply for them to be a comparator.)
All the grounds of appeal were dismissed. The following parts of this judgment are of particular interest to employers.
Article 157 of the TFEU does have direct effect.
Asda had argued that the presence of a "single source" was insufficient, and that there must be in addition a single establishment, collective agreement or statutory framework. The EAT disagreed, holding that there was no such additional requirement.
Asda also argued that the judge had misdirected himself in various ways when considering the single source issue. Again, the EAT upheld the judge's decision. There was a single employer of the retail and distribution staff, and Asda had an "evidential burden" to displace the proposition that there was a single source of pay and conditions.
A further ground of appeal was that the judge's finding of fact that the pay and conditions of the retail staff and the distribution staff comparators emanated from a single source was perverse. The EAT disagreed. The evidence showed that Asda's executive board, or Wal-Mart's board (Asda being a wholly owned subsidiary of Wal-Mart Inc) regularly scrutinised work done in setting pay for both the retail and distribution staff: "Asda or Wal-Mart could interfere at the stroke of a pen or, more likely, the click of a mouse" in pay setting arrangements. There was no reason why a dual source – Asda and Wal-Mart – could not be a single source of pay and conditions. A single source means a common source and the “vertical” presence of a parent company sitting above its subsidiary does not make the source of pay and conditions other than common to both claimant and comparator.
What does this mean for employers?
This judgement will almost certainly be appealed.
In the meantime, the fact that male and female employees working at different locations, under separately agreed terms and conditions, will not prevent their bringing equal value claims will be welcomed by claimants. Given that employees and their advisors may currently be scrutinising gender pay gap reporting information which will become publicly available, employers whose workforces are separated between predominantly male and female workforces, should consider whether they have an equal pay risk, as well as a gender pay issue before publishing their data.