News & Insights

Closing the gap

David Clay discusses the implications of a recent equal pay decision in which female retail workers of Asda are seeking over £100 million.

Equal pay claims, arising from different rates of pay for men and women performing the same job, have attracted growing publicity recently and identifying correct comparators is central to these claims. This was the focus of a much publicised equal pay case involving Asda which recently returned to the Employment Appeal Tribunal (EAT).

Equal pay claims were brought by over 7,000 (mostly female) claimants who asserted that the work they do was of equal value to the work undertaken by (mostly male) comparators in distribution depots who are paid substantially more (read more here). Asda argued, on various complex legal grounds, that the comparison should not be allowed, stressing that the two groups worked in different establishments and that no common contractual terms existed. The retail workers’ pay was also determined by the board, whereas the distribution depot employees’ pay resulted from collective bargaining.

The EAT held that the tribunal were entitled to find that the distribution employees were valid comparators.

It was necessary to show that the pay came from a single source and this is satisfied where a single body is responsible for the unequal pay and possesses the authority to rectify it. The fact that the groups worked in different locations and their pay resulted from different negotiating processes did not undermine the single source requirement. The board had authority to review pay setting processes and could overrule these decisions. It was certainly not necessary to demonstrate a comparison with other employees on the same site, as Asda asserted.

It is understood that Asda have applied to the Court of Appeal to challenge this decision. Even if unsuccessful on this point, Asda have several further grounds to argue (including whether the two groups really do undertake ‘like work’ and the material factor defence).

This decision, coupled with the abolishment of tribunal fees, means there is an ever-increasing risk of these types of claims. Employers must take steps to eradicate any inequality in pay as the decision reduces scope for employers to argue that the identified comparators are unsuitable. Pay audits should be considered to identify any pay gaps and employers should consider if there are substantial reasons for their existence. If not, steps should be taken to close any gaps.