Equal pay and comparability of pay terms
Asda Stores v Brierley
For the purposes of equal pay law, two distinct parts of a workforce (here female shop floor workers and higher-paid male distribution centre workers) can compare their pay, even if they are located at different sites, in different parts of the organisation/group, and with very different pay arrangements/management structures.
In order for an equal pay claim to be brought, claimants must be able to compare themselves to a valid comparator. The comparator must be a real person employed by the same, or an associated employer and can include a comparator based at another establishment if ‘common terms’ apply at both the claimants’ and the comparators’ establishments – this does not mean that the terms have to be identical or the same.
In 2016 many thousands of predominantly female store staff in Asda took a tribunal case claiming that their work was of equal value to that of predominantly male Asda employees working in its distribution centre (and that there isn’t a material factor justifying the difference in terms relating to pay).
Asda argued, as a preliminary point, that the law doesn’t permit such a role comparison because the shops and distribution centres are run by different departments and the rates of pay were set using a different method. The tribunal rejected Asda’s defence and held that such a comparison was possible. Asda appealed unsuccessfully to the EAT and the Court of Appeal.
Supreme Court decision
The appeal was dismissed.
‘Common terms’ is not defined in the legislation and this was the first case where the terms were not fixed on both sides by collective bargaining agreements. From existing case law, the correct test is to ask ‘if the comparator was employed to do his present job in the claimants’ establishment, would the existing terms and conditions apply?’ The Supreme Court refers to this as the ‘North hypothetical’ from the 2013 case of Dumfries and Galloway Council v North. The Supreme Court described this as a ‘threshold test’ and noted that ‘cases where the threshold test cannot be met are likely to be exceptional’. Obvious areas where it might not be met is geographical or historical considerations.
The ability to compare employees across sites is to stop employers from separating out parts of its business to avoid a successful equal pay claim and the ‘North hypothetical’ test does not mean it needs to be physically possible to have the two areas of the business work alongside one another; it requires imagining that they were – so in this case that the depot was situated alongside a retail shop.
The tribunal had considered the wrong question by asking whether there were ‘common terms generally as between claimants and comparators’ and then going on to carry out a line-by-line comparison of the specific terms and conditions of employment of the distribution employees versus the retail employees. The correct exercise is to make a broad comparison by asking whether the terms enjoyed by the distribution employees were substantially the same at the distribution depots and at the claimants’ establishments. This broad comparison is needed to highlight comparisons which cannot realistically be made because of geographical or historical factors.
However, the tribunal had also concluded that the distribution employees would have been employed on substantially the same terms if they had been employed at the claimants’ site and Asda did not challenge this finding as being any misdirection of law on the part of the tribunal. Therefore, the Supreme Court saw no reason to interfere with this finding.
The Supreme Court also warned that this fact-finding ‘threshold test’ should not be a prolonged enquiry and a major hurdle for an equal pay claim, as to allow this would defeat the purpose of the equal pay legislation. It emphasised that employers still have other arguments to deploy such as showing that differences in pay are justified when the value of the claimants’ work is evaluated as against the comparators, or if it raises a ‘genuine material factor’ defence and are able to show that there is a good, non-discriminatory, reason for differences in pay.
Link to judgment: https://www.bailii.org/uk/cases/UKSC/2021/10.html
It is important to note that this is not the final decision in this case, it is only a decision on whether the two sets of employees can be compared for the purposes of equal pay. Here the claimants must now go on to show that they performed work of equal value and Asda will be able to rely on any defence open to it, such as that the difference in pay was due to a genuine material factor which was not itself discriminatory.
The Supreme Court’s decision has just made comparisons for equal pay purposes between different sites much easier, by making it clear that the threshold test is a low one and arguing that there are no common terms should not be used as a major battle ground in an equal pay claim. Employers can deploy all of their other arguments about work of equal value etc but the question of ‘common terms’ is now an area which is unlikely to be argued about going forward.
With the abolition of tribunal fees, such mass actions for equal pay may well increase. The introduction of gender pay gap reporting means more information on gender pay is available with the perhaps inevitable result that this issue is only likely to pick up steam. It is reported that many other claims are awaiting the result of this case.