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Blog: Tesco equal pay claims – another reminder of your hidden risks

As I speak to more and more businesses about pay equality, I’m finding that most senior executives still don’t appreciate the hidden risks posed by ‘equal value’ claims for equal pay. And indeed that’s the case with quite a few HR directors too.

But what the new Tesco claims remind us is that equal value claims are definitely the aspect we all need to be most focussed on.

£4 billion exposure

You’ve probably heard that the ACAS Early Conciliation process is currently handling claims from a representative sample of female Tesco store-based staff who are claiming equal pay with male workers at Tesco’s distribution centres. It’s essentially the same claim as is continuing against ASDA at the moment. This relatively small group of just under 100 Tesco employees are just the vanguard, and if they win then the floor is open to hundreds of thousands of their female Tesco colleagues to bring similar claims. Apparently the total exposure to Tesco could be up to £4 billion in back-pay (see the Guardian and the BBC for informative articles).

The obvious… and the not-so-obvious

In the many Equal Pay Audits that my colleagues and I have now conducted on businesses and public sector bodies, it has been apparent time and time again that nowadays there is relatively little deliberate, intentional paying of men and women differently for precisely the same work. It still occurs, but it’s getting less and less. Take one step backwards, and look at those in similar but not identical roles, and the picture is worse, but the trend still seems to be going in the right direction. (Having said that, the day on which everyone in the HR team is paid the same as their quite genuine equivalents in the Finance team is still a distant dream for most.)

But at least these types comparisons are very (or fairly) obvious, and you know where to look when you’re assessing risk and potential financial exposure. The big problem is with these ‘equal value’ claims, where the comparisons can come at you out of the blue, never previously on your radar.

‘Equal value’ claims for equal pay have been with us since 1984 but are still little understood. Equal value comparisons can be made between those doing completely different jobs in completely different parts of an organisation. As the ASDA claims reminded us last year, they can even be made between employees working in different group/associated companies (the store staff and the distribution depot staff are employed by separate companies within the ASDA group). It can be very difficult to spot and predict them all unless you are an equal pay expert.

The power of JES

This is, of course, why Job Evaluation Schemes are so helpful and so effective at both preventing ‘equal value’ claims arising in the first place and then providing you with very solid defence if such a claim is bought. As long as you implement your JES properly and of course follow it consistently. And as long as they are modern, fit-for-purpose and don’t contain the in-built sexism that many of the older schemes do, which is to over-value traditionally ‘male’ activities and undervalue traditionally ‘female’ activities when dishing out the pay points. (It is no accident that Birmingham City Council is having to find a spare £1 billion for the back-pay for all those female cleaners, school cooks, etc. who successfully raised equal pay claims by comparing their pay with that of refuse collectors and the like. Their long-standing local authority JES was way out of date and significantly sexist in favour of men.)

Key messages from Tesco

To my mind, the key reminders for us to take from these new Tesco claims and the staggering potential cost that has made exciting headlines are as follows:

  1. Equal Pay Audits. Do them. Do them thoroughly. Across your whole organisation, into every nook and cranny and every subsidiary and associated company. Get the data. Shine the spotlight. Yes, we at Menzies Law would definitely be delighted to carry this audit out for you – although, as they say on the BBC, ‘other products are available’. Whoever does it, get it done, and soon.
  2. Your Board really can’t afford to have their heads in the sand over this. I get the feeling that most (mostly male) senior executives really don’t want to know about these equal value risks. They don’t really understand them and they’re hoping that if they ignore them for long enough, the risk might go away – or that HR might somehow solve any that do arise with your HR magic wand. However, your executives need educating and they need equal pay risks of all types firmly up their on their Risk Register in capital letters.
  3. Group companies and associated organisations in your structure could be the weak link. It’s no good you doing the right thing and having a marvellous, fit-for-purpose Job Evaluation Scheme for your main organisation if it has a coach and horses driven through it because in another group company they haven’t adopted the same scheme and are paying certain people or roles more than you pay at your end

Luke Menzies

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