News & Views

Tesco faces largest equal pay claim on record

HK
BY Heather Kemmett
Employment law

Tesco is the latest supermarket retailer to face equal pay claims from female staff claiming that their lower paid work is of equal value to the work done by higher paid male colleagues. Solicitors representing 100 Tesco staff have brought a series of similar claims against ASDA and Sainsbury’s which are due to be heard in the Court of Appeal later this year. Although claims have not been formally lodged against Tesco, the employees’ solicitors have indicated that over 200,000 staff could be affected, which would give rise to a potential liability of over £4 billion.

The potential claim is based on the allegation that Tesco pays female in-store staff £8 per hour whereas male staff in its distribution centres earn up to £11 per hour. Broadly speaking, equal pay claims can be brought on three grounds:

  1. The jobs are considered “like work”, i.e. they are the same or broadly similar in terms of the skills or knowledge needed;
  2. The jobs have been “rated as equivalent” based on a job evaluation scheme; or
  3. The jobs are of “equal value” in terms of the demands made on the employees.

It is possible for an employer to justify differences in pay if they have a “material factor” defence. Commonly-relied upon examples of material factors are:

  • Past performance;
  • Seniority / length of service;
  • Differences in the work (where they do not already render the work not "equal work");
  • Different hours of work;
  • Geographical reasons;
  • Market forces and skills shortages; and
  • Pay protection arrangements following a job re-grading exercise.

A common example of equal value work is comparing cleaners and bin men (and indeed, a successful mass claim against Birmingham City Council involved exactly these roles). While the jobs are very different in terms of day-to-day duties, they are both unskilled jobs involving physical labour and, crucially, are of equal value to a council tasked with providing public services. Refuse collection tends to be carried out by males whereas cleaning tends to be done by females; however, traditionally bin men tended to earn more than female cleaners, giving rise to inequality in pay.

In this case, Tesco employees allege that there is an inherent bias within Tesco which has "allowed store workers to be underpaid for many years" and that comparable profits in distribution centres and stores demonstrate that the jobs are of equal worth and value to the retail giant. While the jobs themselves may be very different, if they are found to be of equal value (and there is no material factor explaining the difference in pay) Tesco could be required to equalise pay and pay damages for back pay.

Situations in which there is a pay differential between male and female employees doing the same job are paid differently give rise to an inherent risk to an employer, who should consider whether there is a material factor explanation for the pay disparity. However, equal value cases involving groups of different workers can be much harder to spot and can take employers by surprise. Carrying out a job evaluation exercise can help employers arm themselves against less obvious equal pay risks and provide a defence to equal pay claims.

If you think your organisation would benefit from an equal pay audit or job evaluation exercise, our HR Consultancy team can assist. Contact our Head of HR Consultancy, Roz Wood on 0141 406 1653 or at roz.wood@lawatwork.co.uk to find out more.

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