Employment Law Cases
Equal pay: comparisons based on EU law
K v Tesco Stores Ltd
The treaty which forms the basis of the right to equal pay in European law has direct effect in respect of claims where work is said to be of equal value, and not merely in respect of other instances of ‘equal work’ under UK legislation (i.e. like work or work rated as equivalent). It therefore can be invoked in legal proceedings between individuals directly.
Approximately 6,000 current and former Tesco employees, both female and male, who work or used to work in Tesco stores, brought proceedings before the employment tribunal on the ground that they had not enjoyed equal pay for equal work as their male or female colleagues in Tesco’s distribution centres, contrary to the Equality Act 2010 and art. 157 of the Treaty on the Functioning of the EU (TFEU). The female claimants submitted that their work and that of their male colleagues in the distribution centres was of equal value and that they were therefore entitled to compare their work to that of those male distribution workers under art. 157 even though the work was carried out in different establishments. They argued that in accordance with art. 157, Tesco was the ‘single source’ for their terms and conditions of employment and those of the male distribution workers. Tesco countered that art. 157 did not have direct effect in the context of claims based on ‘work of equal value’ and therefore the female claimants could not rely on that provision before the tribunal. It also disputed that it constituted a ‘single source’.
The tribunal referred two issues to the ECJ:
- does art. 157 have direct effect in claims made on the basis that the claimants and their comparators are performing work of equal value, and
- if the answer to that question was no, is the single source test for comparability in art. 157 distinct from the question of equal value and, if so, whether that test has direct effect
The ECJ held that the TFEU imposes obligations on employers to ensure both equal work and work of equal value, and this is one of the foundations of the EU. The wording is clear and precise, which means that these provisions can be relied on directly by individuals in equal value claims in the national courts.
The ECJ also confirmed that where unequal pay can be attributed to a single source, the work and the pay of those workers can be compared even if they work in different establishments. Article 157 of the TFEU may be relied upon before national courts in claims about work of equal value carried out by workers in different establishments of the same employer, provided that the employer constitutes a single source for setting pay.
Link to judgment: https://www.bailii.org/eu/cases/EUECJ/2021/C62419.html
This decision potentially makes it easier for equal pay claimants to compare themselves with employees working in different jobs in different locations. The Supreme Court’s decision in the Asda case had already indicated that it should not be a complex exercise for employees to compare themselves with those working at different establishments. The EU single source test is even simpler to apply - claimants in the UK can now rely on it in all types of equal pay claim, so long as one single employer is able to rectify any pay inequality.
Despite the UK’s withdrawal from the EU, the decision will continue to have effect within UK law by virtue of the European Union (Withdrawal) Act 2018, which makes express provision for the treatment of both EU-derived domestic legislation and enforceable EU rights.
The case will now return to the tribunal to determine whether the work done by the workers and their comparators is in fact of equal value and the reasons behind the pay discrepancy. Due to the complexity of this case, it’s likely to be several years before a final conclusion is reached.