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 rated 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 (the common terms requirement).
Approximately 35,000 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 depots. The employment terms for retail employees are different to the terms for distribution employees.
Although Asda's executive board had general oversight, the terms and conditions were set by different processes.
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. Both the Employment Appeal Tribunal and the Court of Appeal agreed. Asda appealed to the Supreme Court.
The essential question in the appeal was whether common terms applied between the Claimants' and the comparators' establishments.
The Supreme Court
The Supreme Court dismissed the appeal.
The North hypothetical
Analysing case law the Supreme Court referred to a previous Supreme Court case of Dumfries and Galloway Council v North. In North the Court confirmed that the purely hypothetical exercise to be undertaken to determine whether terms are common (the North hypothetical) is to ask whether "assuming that the comparator was employed to do his present job in the Claimants' establishment, the current core terms and conditions would apply". The North hypothetical helps prevent the potential discriminatory action by an employer of allocating groups of employees to different sites so that they have different terms when the difference is not due to location.
Turning to the Asda case, if the distribution employees were employed to do their job at the retail site would their current core terms and conditions apply? If the answer is yes, the distribution workers are a valid comparator. The Employment Tribunal found that the distribution employees would have been employed on substantially the same terms. These findings on the North hypothetical stand. The Supreme Court confirmed that it did not have to be feasible for the hypothetically relocated employees to be able to carry out their role at the other group's establishment. In the current case it was possible to envisage a depot next to the retail store at the Claimant's establishment.
Although the appeal has been dismissed, this does not mean the Claimants have been successful in their claim. All that has been established is that the terms and conditions of employment at the distribution depot can be used as a valid comparison. This is not the end of the road in this litigation. Asda will have the opportunity now to show that the pay disparities are justified when the value of the Claimants' work is evaluated or if it raises a "genuine material factor" defence. We will keep you updated.
Equal pay is notoriously complex. If we can be of any assistance with the issues raised in the update please get in touch.
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