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Retail workers comparable to distribution centre workers for equal pay claim

05 September 2017

The Employment Appeal Tribunal (“EAT”) has ruled that individuals working in Asda’s retail stores can compare themselves with distribution centre workers in claims for equal pay.

Background

Last year, over 7000 Asda employees issued equal pay claims in the Manchester Employment Tribunal (“ET”). They argued that retail store workers carry out work of “equal value” to those in the distribution centres, making the latter appropriate comparators for the purposes of an equal pay claim. Store workers are predominantly women, whereas the distribution centre workforce is mainly comprised of men.  

Asda contended that it was not possible to draw a comparison between the roles because the shops and distribution centres were run by different departments and the rates of pay were set using a different method. The ET rejected this in October 2016. Asda appealed to the EAT which has now upheld the ET’s decision, allowing the UK’s largest private-sector group equal pay claim to proceed. 

The EAT’s ruling

The EAT’s judgment highlights some significant points relating to comparators in equal pay claims, although the case will probably be appealed further so this is unlikely to be the final word.

The EAT confirmed that the EU law principle of equal pay for equal work (contained in Article 157 of the Treaty on the Functioning of the European Union) is directly effective in a claim asserting that work is of equal value. Where there is a “single source” of pay and conditions for both claimant and comparator, a comparison is permitted. This negated Asda’s argument that the differing methods of setting payment rates would prevent comparison.

The EAT went on to say that, in order to establish “common terms” for the purposes of the Equality Act 2010,the ET may consider the similarity between various terms observed at different establishments. The fact that similar terms have a different genesis and history does not prevent them from being “common terms” and the ET is entitled to take into account the similarity of the terms as well as their history. The EAT gave the example of an employer who applies men’s terms to women at a different establishment, to avoid discrimination, recognising that their work is of equal value.

Finally, the EAT decided that if no actual comparator works at the claimant’s establishment, the claimant can use a hypothetical comparator. This is known as the “North hypothetical test” (referring to a 2009 EAT decision, Dumfries and Galloway Council v North and others). In the Asda case, this involved the ET considering whether, if distribution staff had been employed in retail stores, they would have been employed on broadly similar terms to the staff in the distribution centre.

The EAT decided that the answer to that question was yes, enabling the claimants to compare themselves to a hypothetical distribution worker employed in a store. In reaching this decision, the EAT rejected Asda’s argument that the Equality Act 2010 had altered the law when replacing the relevant section of the Equal Pay Act 1970, preventing the use of “North” hypothetical comparators.

Next steps

Given the potentially wide-ranging implications of this decision, the EAT gave Asda permission to appeal to the Court of Appeal. Asda has indicated that it will proceed with an appeal.

Asda Stores Ltd v Brierley and others - judgment available here.

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