For almost the last decade, Britain’s biggest supermarkets have been defending legal actions from their employees over equal pay. These claims are based upon the notion that the shop floor staff (who are mostly women) should be paid the same as employees who work in distribution centres (who are mostly men). Tesco, Asda, Sainsbury’s and Morrisons among others are all facing claims that their failure to pay these roles equally amounts to sexual discrimination.
However, these claims are not new. In the 1980s, Sainsbury’s faced the same allegations – that it was failing to pay its employees in shop floor jobs equally to those in distribution centre roles. It lost that case, which may suggest the likely direction of this new wave of claims.
Decisions of successive courts indicate that the supermarkets’ defence lacks legal merit. Asda and Tesco have lost in the UK Supreme Court and European Court of Justice respectively on the issue of whether shop floor workers can compare themselves to distribution centre workers. As a result of these judgments, the other supermarkets capitulated and withdrew their defences on this issue.
Who should decide pay levels?
Recently, Sainsbury’s has stated that it should be the one to decide how it pays staff. Given that it has been on the receiving end of several equal pay claims, one wonders whether this is truly sensible?
At Sainsbury’s annual general meeting this year, a special resolution – supported by household names such as Legal & General, Nest and HSBC Holdings Plc – called upon the supermarket to commit to paying all workers at least the Real Living Wage by July 2023.
The special resolution was intended to improve the supermarket’s ESG credentials. Instead, Sainsbury’s recommended that shareholders vote against the resolution. Sainsbury’s chief executive officer, Simon Roberts, was quoted as saying “We absolutely believe as a business we should make the decisions on how we pay our colleagues”. Sainsbury’s chairman, Martin Scicluna, doubled down on this statement: “We also believe that we need to make all business investment decisions independently and that these decisions should not be outsourced to a third party.”
As a result, the resolution failed to get the necessary 75 per cent of the votes to pass.
The cost-of-living crisis
The failure to pay staff equally for equal work comes at a time when the cost-of-living squeeze is affecting the lowest paid individuals in society. Moreover, it is a kick in the teeth for those key workers, who were working on the front lines in stores during the height of the pandemic.
Last month, Sainsbury’s announced that it expected its underlying profit before tax to be between £630m and £690m in the year to March 2023. At a time when the costs of living – and particularly the costs of food – appear to be rising at an alarming rate, Sainsbury’s refusal to listen to calls from its own shareholders to raise the wages of its lowest paid workers is Scrooge-like at best. Sainsbury’s staff are fighting hard for justice and hoping that instead of a lengthy court battle, the supermarket giant will soon see the light and listen to their demands for equal pay.
The key takeaways are:
Employers who have previously been on the receiving end of equal pay claims should ensure that their organisations do not repeat the same mistakes and leave themselves vulnerable to subsequent claims.
Large employers should consider how to respond to ESG-related special resolutions and consider whether opposing such resolutions will harm their reputation.
Although a final conclusion may be some way off, decisions from the highest courts indicate that there is legal merit in the employees’ claims.
Nathaniel Barber is a senior associate at Keller Postman UK