Asda equal pay ruling could have ‘costly implications’ for other employers, experts warn

Supermarkets and similar businesses could see further claims after Supreme Court decides female retail workers can be compared to male distribution workers

Asda retail workers can be compared to distribution workers in terms of pay, the Supreme Court has ruled, in a landmark case that could pave the way for more employees to bring equal pay claims against the supermarket.

The judges unanimously upheld the Court of Appeal’s decision that the supermarket’s retail workers, who are predominantly women, are on ‘common terms’ with the predominantly male distribution workers.

The ruling does not mean that the workers’ claim has succeeded, only that it can now proceed in an Employment Tribunal.

However, experts have said the ruling could make it easier for shop floor workers – who are predominantly women – to bring similar equal pay claims against other supermarkets.

The case was initially launched by a number of Asda retail employees who argued that them being paid less than predominantly male colleagues working in the distribution centre amounted to unequal pay.

Asda applied to have the claim dismissed on the basis that it didn’t meet this common terms test, however the initial Employment Tribunal ruled in favour of the retail workers. This was upheld by the Court of Appeal, and now the Supreme Court.

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The common terms test is what is known as a threshold test that an equal pay claim needs to meet before it can proceed, and is designed to ‘weed out’ claims where the disparity in pay can be explained by geographical factors.

In this case, it means that retail workers would be on substantially similar terms if they were hypothetically doing the same job but based out of the distribution workers’ site, and vice-versa.

In its judgment, the Supreme Court said when comparing whether workers were on common terms, it did not have to be “feasible” for the retail workers to actually be able to carry out their role from the distribution workers’ site. Instead, it could be envisioned that they were hypothetically working out of a supermarket next door, and vice-versa.

It also said that employment tribunals were not required to do a line-by-line comparison of different sets of terms and conditions, and that it was enough that the terms would be the same or substantially the same at either site.

In her judgment, Lady Arden warned that making this threshold tests harder could undermine the aims of equal pay legislation.

“If in the absence of firm case management the threshold test is elevated into a major hurdle mirroring other elements of an equal pay claim, the purpose of equal pay legislation will be thwarted, and the pay disparities will not be investigated.

“This outcome would be contrary to the object of the equal pay legislation,” she said.

Commenting on the ruling, Andrew Nugent Smith, managing director of Keller Lenkner UK, which is acting for employees in a separate but similar case against Tesco, said today’s ruling set a strong precedent.

“This is a significant victory for shop floor workers in the long-running battle between supermarkets and their employees. Today’s ruling sets a strong precedent for other claims against large supermarkets,” he said.

“It is good to see that shop floor workers can now be validly compared to distribution workers, and that today's Supreme Court ruling has been made in favour of employees.”

Suzanne Horne, partner at Paul Hastings, said that this ruling would “undoubtedly alarm other supermarket chains and retailers”. She estimated that, if the case went on to succeed at an Employment Tribunal, collectively UK supermarkets could risk facing up to £8bn in unequal pay claims.

“While this decision does not yet mean that female supermarket workers have won their case, they are certainly a step closer, and today’s ruling will have costly implications for all employers – not just those in retail – for years to come,” she said.

Rhona Darbyshire, employment partner at Cripps Pemberton Greenish, said that this was a particularly significant ruling for the private sector. “Traditionally equal pay claims have been the domain of public sector employees, so this case shifts the focus of the issue of pay equality to the private sector,” she said, adding that employers in other sectors including manufacturing and food and drink – where there are similar staffing models – were also at “significant risk” of historic claims.

An Asda spokesperson told the BBC: “We are defending these claims because the pay in our stores and distribution centres is the same for colleagues doing the same jobs regardless of their gender.

“Retail and distribution are very different sectors with their own distinct skill sets and pay rates.”