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Case update (2): Equal pay – Comparators

What do we already know?

We updated you in our February 2019 Newsletter Case update (2): Equal pay – Comparators on the Court of Appeal’s decision in Brierley and others v ASDA Stores Ltd that the ASDA store worker claimants were entitled to compare themselves with depot workers in distribution centres.

ASDA appealed to the Supreme Court.

What’s new?

Summary: Can lower paid supermarket employees, who are predominantly women, compare themselves in an equal pay claim to higher paid distribution depot employees, who are mainly men?

Yes, said the Supreme Court in Brierley and others v ASDA Stores Ltd available here.  Further the test for whether employees in different establishments have “common terms” is a simple threshold test, with likely only a few exceptional cases where it will not be met.

Background:  The Equality Act 2010 provides that a sex equality clause should be implied into employment contracts, meaning that men and women should receive equal pay for equal work.  Equal work includes work which is (i) the same or similar; (ii) rated as equivalent under a job evaluation scheme (JES); or (iii) 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).

Facts:  A large group (reportedly up to 44,000) of female ASDA supermarket employees brought a claim for equal pay arguing that their shop floor, retail, roles were undervalued by the supermarket. The employees argued that their work was of “equal value” to ASDA’s distribution staff in its depots.

Although ASDA’s main business focuses on its retail sector, it also operates a number of distribution depots. The employment terms for retail (including shop floor) employees are different to the terms for distribution employees.

Earlier decisions

The Tribunal 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 retail employees’ and the comparators’ establishments.

Supreme Court decision

The Supreme Court dismissed ASDA’s appeal and found that the shop floor retail employees do have “common terms“ with the distribution employees for equal pay purposes.

To arrive at this conclusion, the Court applied the “North Hypothetical“ (named after a previous case) and assessed whether the distribution employees’ existing terms and conditions would be broadly similar if they were employed to do their present job at the retail establishment.  For the purposes of this hypothetical exercise, it does not have to be feasible for the hypothetically relocated comparator to be able to carry out his or her role at the claimants’ establishment. It can be assumed that the staff work in separate premises if that is what their work requires. In this case it could be envisaged that a distribution depot was situated next to the retail store at the claimants’ establishment.

The Court found that the claimants succeeded on this hypothetical exercise and it confirmed the Tribunal’s finding that the distribution employees would have been employed on substantially the same terms.

However, the Court emphasised that this common terms analysis is only a threshold test and there will only be a few exceptional cases where it is not met, for example, where differences in terms between establishments can be shown to be clearly rooted in geographical factors.

In addition, the Court confirmed that when carrying out a common terms analysis it is not necessary for a Tribunal to do a line by line comparison of the terms and conditions of the claimants and their comparators. Equally, collective bargaining agreements need not be in place for a cross-establishment comparison to be made.

In summary, the common terms analysis test will weed out a few plainly hopeless comparisons, but should not involve a detailed assessment. Ultimately, it is a test which does not indicate likelihood of success on the underlying claims, and therefore should not involve considerable time and resource.

Implications:    Although this decision is only a first step in the retail employees’ claim for equal pay, it is still bad news for employers as it makes such claims easier to bring.  It reduces one of the employers’ technical defences, the common terms test, to a simple threshold test which will now be easier for employees to meet.

The next step in the litigation is for the retail employees to show that they carry out work of “equal value“ with their comparators, a detailed and time-consuming process for both sides, requiring preparation and analysis of job descriptions for each role involved. After that, if the roles are found to be of equal value, it will be for the Tribunal to consider whether any pay difference between them is by reason of a material factor other than sex.

In the meantime, although the facts in this case are specific to ASDA, any employer with different groups of predominantly male or female workers should review its pay practices, whether or not these groups work at the same site. Internal organisational constructs, such as divisions, departments and even location, are unlikely to prevent an employee being able to compare themselves for equal pay purposes with an employee in another part of the organisation.

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