Last week, in the long running case of Asda Stores Ltd v Brierley and ors, the Supreme Court decided that supermarket employees can compare themselves with employees based at offsite distribution depots for the purpose of equal pay claims.

The legislation

In terms of the Equality Act 2010, to bring an equal pay claim an individual must be able to identify a more highly paid comparator of the opposite sex performing equal work at either:

  • The same establishment; or
  • A different establishment where 'common terms' apply, either generally or between the individual and their comparator.

The claim

Over 7,000 retail staff employed by Asda, who are predominately female, sought compensation because they receive less pay than other employees for, what they argue to be, the same work. The difference in pay claimed is up to £3 per hour.

The retail employees compared themselves to employees at Asda's distribution depots, who are predominately male. The roles involve different types of work at separate locations. 

A preliminary question was whether the distribution centre employees were appropriate comparators. The employment tribunal, EAT and Court of Appeal all decided that they were. Asda appealed to the Supreme Court.

The decision

The Supreme Court dismissed Asda's appeal, confirming finally that the retail workers are entitled to compare themselves to the offsite distribution staff for equal pay purposes.

It found that the Court of Appeal was correct to decide that the question to be considered was whether a distribution employee would be employed on terms broadly similar to their current terms if they were, hypothetically, asked to do their job in a retail store, no matter how unlikely that might be. The Supreme Court made it clear that "this is important because otherwise an employer could avoid equal pay claims by allocating certain groups of employees to separate sites so that they can have different terms even where this is discriminatory".

The Court found that the distribution employees would have been employed on substantially the same terms if they had been employed on the same site as the retail workers and that, therefore, they were appropriate comparators. 

The Supreme Court also provided guidance on the future management of cases involving a cross-establishment comparison. In the future, employment tribunals should not have to undertake a long and complicated enquiry – the answer should be found by inference from the relevant facts and circumstances without undertaking a line-by-line comparison of different sets of terms and conditions. Appeals similar to this one will be discouraged.

What does this mean?

Although the retail employees were successful in this appeal, the claim for equal pay has not yet succeeded. It still needs to be decided whether:

  • The retail employees are engaged to do equal work to that of the distribution employees; and
  • If they are, if the difference in pay constitutes unlawful sex discrimination or whether Asda has a non-discriminatory justification for the difference - Asda previously indicated that it would argue that any pay differentials are justified by the existence of different market rates in different industry sectors.

Many other large UK retail employers, including Tesco, Sainsbury's, Morrisons and Next, are currently facing equal pay disputes in which female shop floor employees are claiming that their work is of equal value to that carried out by primarily male warehouse staff. It's being reported that this could cost up to £8 billion in back pay.

Employers should continue to keep an eye on developments and consider what impact any future decisions on equal pay might have on their own business models.

Please get in touch with a member of the employment and immigration team to discuss any of the issues raised in this blog.