The Equality Act 2010 incorporated the principle originally set out in the Equal Pay Act 1970 that a sex equality clause should be implied into employment contracts, implementing the principle that men and women should receive equal pay for equal work.
Equal work encompasses:
- Like work;
- Work rate as equivalent; and
- Work of equal value
When comparing pay, an individual needs to identify a real comparator of the opposite sex who is working at the same establishment or at establishments where common terms are observed.
Approximately 30,000 female Asda supermarket staff brought a claim for equal pay arguing that their consumer-facing roles were undervalued by the supermarket. The Claimants argued that their work was "work of equal value" to the distribution staff.
Asda is a wholly owned subsidiary of American giant, Wal-Mart. Although Asda's main business focuses on its retail sector, it also operates a number of distribution centres. The employment terms for retail employees are different to the terms for distribution employees.
The terms and conditions are set by different processes, however Asda dictates the operation and implementation of the terms, with Wal-Mart having an overarching governance.
The Claimants brought their claim in the Employment Tribunal, where it was held that the retail employees were entitled to compare themselves for equal pay purposes to the distribution employees. The Employment Appeal Tribunal agreed. Asda appealed to the Court of Appeal.
Court of Appeal
The Court of Appeal dismissed Asda's appeal and found that common terms were observed. The judgment is clear that both classes, retail and distribution employees, had common terms applied wherever they work. The "wherever they work" principle extends to workplaces where they would never in practice work.
The Court of Appeal went on to hold that the employee's terms did in fact have a single source, because they were set by the same employer.
The implications of this decision are potentially huge for employers with employees at different establishments who ostensibly carry out different roles but who have common terms from a single source. Employers who are concerned about discrepancies in pay might want to consider looking into one of the following options:
- Job evaluation study – this is an analytical way of ranking jobs in a non-discriminatory way. Experts are involved in the study and the results can help provide an employer with a defence to an equal pay claim, if they are favourable.
- Equal pay audit – an audit to identify any possible gender based discrepancies.
Employers should be aware that once a pay discrepancy is identified, employees may find it easier to bring a claim.
With the second round of gender pay reports due in April, now is the opportune moment for employers to address any pay issues. Although gender pay and equal pay are not the same thing, inevitably, significant pay gaps identified under the gender pay reporting are likely to increase interest in equal pay within the company. Where there is a concern over the approach to take, legal advice should be sought.
We understand Asda are seeking to appeal to the Supreme Court.
It is worth noting that the Court of Appeal judgment was also handed down last week in the case of Brierley and others v Asda Stores Ltd, Ahmed and others v Sainsbury's Supermarkets Ltd. The Court of Appeal held that Claimants in equal pay claims could submit their claims on the same ET1 if their roles are both similar and based on the same set of facts. There is no requirement for the roles to be identical. However, it may be more appropriate (particularly while Employment Tribunal fees are not an issue) to submit separate ET1s and ask for the cases to be conjoined at the case management stage.