Mass Equal Pay Claims – Are You Next?

Around 30,000 shop floor workers have cleared the latest hurdle in their equal pay challenge against their supermarket employer, as a result of the Court of Appeal’s decision in ASDA v Brierley. The case is spearheading a wave of equal pay claims against supermarket employers, with female claimants arguing they are entitled to equal pay with male depot colleagues. The trend looks set to spill beyond the confines of the supermarket aisle to other retailers and quite possibly beyond. Given that historically mass equal pay litigation has been mainly public sector focussed this is likely to be new territory for many private sector organisations. We take a look at what steps your business can take to determine if it is vulnerable, why it matters and what steps it can take to best protect itself.

Under the Equality Act 2010, women are entitled to equal pay with men who carry out the same /similar work, work rated as equivalent under a job evaluation scheme (JES) or work of equal value. Based on the pattern of supermarket cases to date, it is organisations where there are predominantly male and female dominated roles who are the most likely target of mass claims, if one group earns more than the other in pay, allowances and other bonuses.

The connection between the roles of potential claimants and comparators will not always be obvious. They may be carried out at different locations, by employees in different divisions and under separately negotiated terms. However, a claimant can compare themselves to a comparator at a different location if the comparator’s terms would be the same if he worked at the same location as the claimant. This is the case even if the claimant and comparator would never work at the same location due to the practical requirements of their roles.

Further, in Brierley, the fact that the claimants’ pay is set by a board committee and comparators’ by depot management as part of a collective bargaining process is trumped by the fact that it is the Executive board, a “single-source” who can review and change the pay of both groups if necessary.

If you do identify gender segregated roles within your workforce with a pay disparity, claimants must be carrying out work of “equal value” with their comparators in order to succeed. Determining “equal value” is notoriously difficult. A points based system is often used, awarding points to factors such as mental skills, physical effort, initiative & independence and knowledge. If the jobs are scored the same (or similar) they are of equal value. The process is similar to a JES and indeed, a valid JES gives an employer an automatic defence to an equal value claim if the claimant and the comparator have been graded differently under the JES. Employers concerned about equal pay exposure could therefore implement such a scheme or, for a more light-touch approach, carry out an equal pay audit or job benchmarking exercise which will give an indication of whether roles may be of “equal value” or not.

These types of exercises also give an employer an opportunity to document any rationale for pay discrepancies. This is helpful as, even if equal value is established, employers have the opportunity to explain that differences in pay are not because of sex. We understand for example that ASDA justifies the pay difference on the basis that depot employees work anti-social hours in uncomfortable conditions but it is yet to be seen whether the Court agrees with this and whether it is a proportionate way of ASDA achieving its aims.

The repercussions for employers who unsuccessfully defend such claims are huge. Claimants are entitled to five years’ back pay (six in England) and equal pay going forward. For employers who do identify an exposure, there are a number of robust options, including equalising pay or implementing pay protection, but these come with their own challenges. Softer measures, such as encouraging employees into roles dominated by the other sex, are also likely to assist on a longer term basis and may form part of a wider gender pay gap strategy. Having transparent pay, bonus and promotion policies also helps take the heat out of the situation. We have found that employees who properly understand the remuneration structure and reasons for any difference are less likely to suspect discrimination and take legal action.