WorkLife 2.0: UK Supreme Court hands down hotly-anticipated Asda decision on equal pay

Last week, the Supreme Court handed down its hotly anticipated decision in the Asda case on comparability for equal pay. The Supreme Court unanimously dismissed Asda’s appeal and held that Asda’s predominantly female retail employee claimants can use male distribution employees as comparators for the purposes of an equal pay claim.

Facts

Back in 2014, a large group of predominantly female retail employees brought an equal pay claim against Asda, claiming they were being paid less than their predominantly male counterparts working in Asda’s distribution depots. Under the legislation governing equal pay, claimants who bring an equal pay claim must, amongst other hurdles, choose a valid comparator who is a real (i.e. not hypothetical) person employed by the same (or associated) employer, either at the same establishment as the claimants or at another establishment. If (as in the present case) the chosen comparator is employed at another establishment, ‘common terms’ (i.e. broadly similar rather than identical terms) must apply at both the claimants’ and comparator’s establishments.

Asda argued that the claimants are not employed on common terms with the comparators, as the retail and distribution locations are separate from each other and the employees at these different locations have different terms and conditions of employment. Asda applied to dismiss the claimants’ claims on the grounds that the retail employees could not use the distribution employees as comparators. After the claimants succeeded on this preliminary issue before the Employment Tribunal, Asda unsuccessfully appealed to the Employment Appeal Tribunal, the Court of Appeal, and, finally, the Supreme Court.

Decision

The Supreme Court unanimously held that the common terms requirement was satisfied, and that the claimants can use the male distribution employees as valid comparators.

In her judgment (with which the other members of the Supreme Court agreed), Lady Arden summarised that in order for the common terms requirement to be satisfied, all that is required “is simply…that the terms and conditions of employment of the comparators must be broadly the same at their establishment and the claimants’ establishment”. She went on to add that the common terms requirement is a threshold test “with a limited function” and that “cases where the threshold test cannot be met are likely to be exceptional”. The limited function of the test is to “weed out” comparators who cannot be used because the differences between them and the claimants are based on geographical factors. This “weeding out” goal can be achieved by asking whether the comparators would still be employed on the same or substantially the same terms if they were employed at the claimants’ establishment.

Where there are no comparators working at the claimants’ establishment (e.g. no distribution employees working in the retail stores), the hypothetical exercise to be undertaken for determining whether the common terms requirement is satisfied is to ask whether, assuming the comparator was employed to do his or her present job in the claimant’s establishment, the comparator’s existing terms and conditions would apply. 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 (for example, it could have been envisaged that a depot was situated next to the retail store at the claimants’ establishment). The Supreme Court found that the claimants succeeded on this hypothetical exercise.

In reaching its decision, the Supreme Court noted that the courts are entitled to take into account the imposition of positive equality duties as part of the wider context in which they must interpret and apply the equal pay legislation.

Finally, the Supreme Court expressed the view that establishing whether the common terms requirement has been met should not be a prolonged enquiry in future case management by employment tribunals. Employment tribunals are not required to perform a line-by-line comparison of different sets of terms and conditions, and the common terms requirement should not be used as a proxy for other elements in equal pay claims, such as evaluation of the comparability of the work done by the claimants and the comparators. Lady Hale concluded that “to use the common terms requirement in this way would permit the fail-safe to triumph over its limited function and substance”.

Implications

The Supreme Court’s dismissal of Asda’s appeal does not mean that the claimants’ claim for equal pay has succeeded. The decision only means that the claimants can use the distribution employees as valid comparators. The claimants’ equal pay claim will now proceed with consideration of, among other factors, whether their work is of equal value.

However, the Supreme Court’s decision may still have significant implications for employers. It is likely to be of particular interest to employers who have different establishments at which workers exclusively carry out different roles. It is now clear that such workers can constitute valid comparators. In fact, as suggested by Lady Arden, cases where the common terms requirement is not met “are likely to be exceptional”.

More broadly, the ruling may well result in an increase in equal pay claims in the future.

Employers should consider how workers are paid across different areas of their business and, in particular, whether there are any groups of workers who are predominantly male that are being paid more than other predominantly female groups. Employers in such a position could be exposed to equal pay claims which, if successful, could result in significant financial implications, as workers can claim back the difference between what they have been paid and what their comparators have been paid over a period of up to six years from the date proceedings were filed.

This ruling is also particularly significant for the private sector. Although equal pay claims have previously been associated more with the public sector, this case shines a spotlight on the issue of equal pay in the private sector. Private sector employers in industries such as retail and manufacturing, where staffing models are similar to that of Asda, may be at risk of significant backdated claims.

Group litigation is likely to be a trend across employment law in the coming years, and not just in the area of equal pay. For further detail on this, please see our blog posts: ‘the likely increase of group workforce claims in 2021’ and ‘trends to look out for in group workforce claims in 2021’.