Legal Update: Asda loses Court of Appeal case
In 2014, more than 7,000 (mostly female) store-based Asda employees raised equal pay claims against the supermarket giant on the grounds that they should receive the same rate of pay as colleagues based in the distribution centre, most of whom are male.
Asda argued the two groups of workers could not be compared as they are not employed under common terms and conditions. Unlike the employees in the retail part of the business, the distribution centre employees are heavily unionised and their terms of employment are agreed via collective bargaining.
In a recent decision, the Court of Appeal dismissed Asda’s appeal, meaning the female store employees can compare themselves with the higher paid and predominantly male distribution centre employees for equal pay purposes.
The decision confirmed that the retail and distribution centre employees were engaged on common terms and conditions (satisfying the UK legal test) and that the terms were derived from a single source (satisfying the EU legal test). The decision is not unexpected and upholds earlier decisions of the Employment Appeal Tribunal (EAT) and the Employment Tribunal.
What happens next?
Asda has stated it will apply to the Supreme Court for a final decision on this preliminary matter, so it may be some time before the claims proceed to a final hearing. Given the value of the claims, a finding against Asda would have a huge impact on Asda’s business, so no surprise they are appealing this preliminary issue. Any resolution is likely to involve a change to pay rates across the business to remove any inequality, presenting a significant cost implication for the business.
Since the claim was raised, a number of individuals have registered with the law firm representing the employees, and more are reported to be joining the claim. As the pay disparity between retail and distribution staff seems to be continuing, other employees would still be able to raise claims for back pay.
Once the claims proceed to a hearing on the substantive issues, the employees will have to show that the retail work is of equal value to the higher paid distribution centre roles. Asda’s position is that there is no equal pay issue for a number of reasons:-
- Hourly rates of pay in store and in the distribution centers is the same for female and male employees.
- Asda maintains it is justified in paying the distribution center employees a higher rate of pay because the demands of the job are different and therefore, the roles are not of equal value.
- It also argues the two employee groups work in different market sectors and are compensated accordingly.
Whether these arguments will succeed remains to be seen.
What is the impact on the market?
Similar litigation with the other big supermarkets is ongoing, with the first hearing in the Morrisons claims anticipated later this year. There have been reports the potential cost to the supermarkets could run to £10 billion.
If the claimants are ultimately successful it could lead to an increase in private sector equal pay claims, as was seen in the public sector and local authority claims. Large employers, and particularly those who have groups of workers across retail and distribution (or other areas where the roles can typically be gendered), will be watching the developments with interest.
With additional reporting by Rebecca Nicholson.