In a long awaited decision, thousands of Asda supermarket workers have won a major victory at the Supreme Court in their battle for equal pay.
Employees can compare themselves with employees at distribution depots for the purpose of equal pay claims under the Equal Pay Act 1970 and Equality Act 2010. If, as in this case, there are no comparators at the claimants’ establishment and it is not clear on what terms they would have been employed there, the court or tribunal should apply the ‘North hypothetical’.
The North Hypothetical explained
This involves considering whether the comparators would have been employed on broadly similar terms to those they are currently on, if employed on the same site as the claimants.
The Supreme Court upheld an earlier court ruling that lower-paid shop staff (who are mostly women), can compare themselves with higher paid warehouse workers, who are mostly men.
Important reminder
The judge stressed the ruling did not mean the 44,000 claimants had won the right to equal pay but that they are now free to take further action and proceed with the next stage in Equal Pay case which can be a extremely lengthy process.
Lady Arden explained that the claimants must still go on to show that they performed work of equal value. Asda will be able to rely on any defence open to it, including that the difference in pay was due to a genuine material factor which was not itself discriminatory on the grounds of sex.
Facts
Around 7000 Asda store workers (mainly women) are arguing they have been paid less, which is unequal pay because most store workers are women, while most distribution depot staff are men. It has been claimed that distribution centre workers (mainly men) were paid between £1.50-3.00 an hour more. Asda has retail stores and distribution centres (in different locations). Staff in store are employed on retail terms whereas the distribution centre staff are employed under distribution terms which have been collectively bargained (agreed) by the GMB Unions, unlike the store staff.
Summary of the timeline of the case
In 2016, an Employment Tribunal held that the Claimant’s (Asda store workers) were entitled to compare themselves to distribution staff.
In 2019 the Court of Appeal upheld this decision which was appealed by Asda.
In 2021 the Supreme Court upholds earlier decisions.
The stages in Equal Pay Cases
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There are three stages in equal pay action:
- Deciding are the jobs comparable?
- If the jobs are comparable, are they of equal value?
- If they are of equal value, is there a reason other than gender why the roles should not be paid equally?
The Legal bit
A preliminary hearing was held to determine whether the comparison between retail and distribution staff fell within the scope of Article 157 of the Treaty on the Functioning of the European Union, or alternatively whether it was a legitimate comparison under the Equal Pay Act and Equality Act 2010. This was because the claims, although were lodged in 2014 and 2015, were seeking six years' back pay, and therefore straddled the introduction of the EqA in October 2010).
It was held that Article 157 had direct effect where, as in this case, the claim was founded on equal value and the question of whether the jobs of store workers and distribution workers are of equal value remains to be considered. The claimants needed to identify a 'single source' of terms and conditions between them and the distribution workers whom they had pleaded as their comparators. The judge held that there was a single source, that single source was Asda’s executive board who exercised budgetary control and oversight over the distribution and retail parts of the business at all material times. As for whether the retail and distribution employees were in the 'same employment' under the EqPA and EqA, the question was whether the different establishments at which they worked were ones 'at which common terms and conditions of employment are observed either generally or for employees of the relevant classes'. The employment judge was of the view that there were common terms generally between the claimants (store workers) and the comparators (distribution centre workers). There was a significant correlation or comparison in a broad way between the terms in retail and distribution, and the differences were not so extensive as to undermine that broad comparison.
Asda appealed unsuccessfully to the Employment Appeal Tribunal, which agreed that Article 157 had direct effect, and endorsed the employment judge's conclusion that there was a 'single source', given the same board of decision makers and the same common terms between the two sets of workers. Asda appealed to the Court of Appeal, and was again unsuccessful. However, the Court of Appeal said it was not clear whether Article 157 has direct effect in an equal value claim: had it been necessary to decide this issue in the present appeal, a reference to the ECJ would have been required. Asda then appealed to the Supreme Court.
The Supreme Court unanimously dismissed the appeal. Lady Arden, gave the sole judgment and confirmed that if there are no employees of the comparator’s group at the claimants’ establishment and it is not clear on what terms they would have been employed there, the court or tribunal must apply what is known as the ‘North hypothetical’. This involves considering whether the comparators would have been employed on broadly similar terms to those they are currently on, had they been employed at the claimants’ establishment. Lady Arden confirmed that it did not have to be ‘feasible’ for the hypothetically relocated comparators to be able to carry out their role at the claimants’ establishment. In this specific case, a distribution depot could be envisioned next to the retail store at the claimants’ establishment.
Union call for discussions
The GMB union has said: "Asda has wasted money on lawyers' bills chasing a lost cause, losing appeal after appeal, while tens of thousands of retail workers remain out of pocket”.
"We now call on Asda to sit down with us to reach agreement on the back pay owed to our members - which could run to hundreds of millions of pounds."
An Asda spokesman in response has said "We are defending these claims because the pay in our stores and distribution centres is the same for colleagues doing the same jobs regardless of their gender. Retail and distribution are very different sectors with their own distinct skill sets and pay rates."
Other supermarkets and retailers warned of possible consequences
The ruling will have possible implications for supermarkets and other retailers, especially those who are already defending their own equal pay claims - such as Sainsbury's, Tesco, and Morrisons.
For advice on all employment matters including equal pay please contact a member of the employment team of 0208 363 4444.
