An Employer’s Guide to Equal Pay
This week has seen another Supreme Court judgement which is very significant in Employment Law and has direct implications for the retail sector.
Asda vs Brierley and others was a claim brought by Asda store workers, mainly women, who felt that they were entitled to the same pay as their Distribution Centre, mostly male, co-workers despite the fact their roles and locations differed.
The case was lost by Asda at the Employment Tribunal, the Employment Appeals Tribunal, the Court of Appeal and now the Supreme Court. There is nowhere else to go, so Asda is now being encouraged to the negotiating table by the GMB Union because otherwise the ruling paves the way for many staff to come forward and the company costs could run into billions.
Before we examine this ruling in more detail and look at the implications for other businesses, we will first set out what equal pay is.
What is Equal Pay?
Equal Pay is set out in the Equality Act and stipulates that males and females carrying out the same work should receive ‘equal pay for equal work’.
This principle also applies to other benefits such as overtime rates, car allowances, sick pay, bonus payments and pension entitlements.
Sounds fair enough and pretty straight forward, what has this dispute been about?
The issue in this case centred on the claimants seeking to draw comparisons with co-workers who were not based at the same location as them, nor were they employed on the same terms.
The dispute centred around ‘equal work’, namely the store staff were of the view their work was equal to the work carried out by those at the distribution centre. Asda, did not agree.
When we look at equal work, there are three factors to consider:
- Like Work.
This is work which is the same or similar, requiring the post holders to have the same or similar skills and knowledge. There are no practically significant differences between the roles.
- Work rated as equivalent.
This concerns how different roles may be equivalent due to them being as demanding as each other, requiring the same skills and decision-making responsibilities. This is established using an evaluation of the job roles, carried out by way of a robust job evaluation scheme.
- Work of equal value.
This is work which is not similar in terms of tasks being performed but it is of equal value, usually because the level of skill, training, responsibility or demands of the roles are equal in value.
This can apply to roles which appear to be similar such as managers of different departments or it may apply to roles which appear to be completely different. This is where the ASDA ruling comes in.
What is the impact of this judgment? What does it mean in practical terms?
This case focuses on the issue of equal work.
Asda has continued to argue (unsuccessfully) that the roles in-store and the roles at their distribution centres were different. They argued that the distribution centre roles were more challenging and there were justifiable differences in pay levels due to geographical location and hence the roles should not be comparable for the purposes of assessing equal pay.
This judgement has allowed for the comparison between the two types of role for the purposes of assessing equal pay. What it doesn’t automatically do is declare that there has been an equal pay breach, that will be for those representing the claimants to establish once they have established that the work carried out by store staff and those at the distribution centres are of equal value.
So, the ability to compare the roles and terms and conditions of store staff versus distribution/warehouse staff is highly significant and will have wide reaching implications for businesses across the retail sectors, not just Asda.
Are there circumstances where a difference in pay for the same/similar roles could be justified?
There are material factors which are relevant when considering the subject of equal pay and where an employer may be able to justify differences in pay rates between sexes.
For example, if you are recruiting someone in an area such as London, then you will likely be able to justify a higher rate of pay compared to someone who is recruited where the costs of living are significantly lower or where someone is more qualified (this must be relevant to the job).
As always, each case would need to be assessed on its merits and advice sought.
Can I take disciplinary action against someone for discussing their pay?
Not if your aim in doing so is to prevent them from identifying that unlawful and discriminatory pay breaches are taking place.
What is the financial risk of losing an equal pay claim?
You will certainly have to adjust the terms and conditions (pay, benefits etc) of the claimant to bring them in line with their comparator and you will be liable for pay backpay which could go back up to 6 years.
You are also exposed to risks of a discrimination claim and constructive dismissal if the person leaves their employment due to the dispute.
Remember- compensatory awards for discrimination claims are uncapped!
How can I reduce my risk of a claim?
The most important thing you can do is to be aware. Be aware of the issue of equal pay when you are recruiting or awarding pay rises or changes in benefits. Make sure any decisions on pay and reward are driven by genuine and legitimate business aims and that they are continually reassessed and re-evaluated.
Always ask yourself the question ‘am I putting in place a pay structure, pay award, bonus etc., that places one sex at a disadvantage over the other?’
And finally…..Seek advice from our experts! Please quote your Client Account Number on all correspondence and telephone calls. 24-hour client advice line: 0800 151 2935.
Read the full Asda vs Brierley judgment here