Guest Blog by Peninsula Associate Director of Advisory Kate Palmer
Asda Stores Ltd v Brierley and ors – Equal pay: comparators
Court of Appeal upholds decision that retail workers can compare pay terms to distribution workers due to common terms applying at the establishments.
Around 30,000 predominately female retail employees have submitted equal pay claims against the organisation, alleging there are not receiving equal pay in comparison to the pay terms afforded to predominantly male distribution employees.
As set out withins 79(4)(c) of the Equality Act 2010, claimants can rely on comparators where “common terms apply at the establishments (either generally or as between A and B).” The claimants submitted that retail stores worked under Retail terms which imposed the same package of terms on all retail sites. The Distribution terms applying to all distribution employees were reached following a recognition agreement in 2012, although pay negotiations are undertaken at each distribution centre meaning pay rates differed from depot to depot.
ET and EAT
Both tribunals determined that the retail workers could compare their pay terms to those applying to distribution workers.
Applying European law, namely Article 157 of the Treaty on the Functioning of the European Union, an equal pay comparison can take place using a comparator from a different workplace where pay terms have been established by one single source. In this case, the employment of retail and distribution staff by one organisation meant there was a single source for determining pay and conditions, even though these were assigned to an internal body.
It was also concluded that the tribunal was correct to find that common terms applied at the different establishments operated by the respondent. Although a distribution worker would not, in reality, carry out work at a distribution site, the tribunal was entitled to use this hypothetical scenario to determine whether common terms would apply to distribution staff regardless of the establishment they worked in.
Asda appealed to the Court of Appeal.
Court of Appeal
The Court (CA) set out key matters to consider under domestic law when determining whether common terms apply at the establishments:
· Common terms do not require all terms that apply to relevant employees to be common. Instead, taking a common-sense approach, “broadly common” terms will satisfy this requirement.
· Whether common terms apply to employees at an establishment depends on whether these terms would apply to these employees if they were employed in an alternative establishment. This can be satisfied on a general basis for all employees, or in relation to employees within the particular class that A and B belong to.
· A hypothetical scenario can be used to determine whether common terms for relevant employees apply irrespective of their established location of work, even if the worker would never carry out work in an alternative location inreality
· Collective agreements which apply standard terms to relevant classes of employees, without reference to a particular location, can be used to determine whether common terms apply. This may be the case for collective agreements which apply to both classes under consideration, or where there is a separate agreement for each class.
· An in-depth consideration of the actual terms applying to a class of employees may not have to be undertaken. For example, where a collective agreement sets out terms and conditions for all employees or a class of employees, this will be sufficient evidence that common terms apply. This will also be the case where the employer imposes organisation-wide terms.
Applying this to the case in question, the CA highlighted that common terms applied to all retail workers employed at retail sites. Not withstanding the slight pay variation between depots, there were also common terms applied to all distribution employees working at distribution sites. Using the hypothetical scenario, if a distribution worker worked at a retail site, although this would not happen inpractice, the organisation would have applied the common distribution terms to their employment.
As common terms and conditions applied to the relevant classes, regardless of where they actually worked, the tribunal had correctly determined that retail workers could compare their terms against those of distribution workers.
Making reference to the ‘single source’ ground under EU law, the CA highlighted that their conclusion would have also been the same as earlier decisions as the pay terms were established by a single source. When determining this, they reiterated that it was sufficient for a company’s board to have power to set or vary pay terms inorder to find a single source.
Note for employers
It is a rare occurrence that a preliminary issue such as this one reaches the higher stages within the tribunal appeals process. This matter, however, is one of extreme importance to the employer as a failure at this stage would have led to the entire equal pay claim failing at the first hurdle.
There are, however, still two more stages for the employees to successfully navigate. They will first be required to show thatthey were carrying out “work of equal value” in comparison to distribution workers, and then the employer can argue that they have a material factor defence to any pay variances. With mass equal pay claims against all four large UK supermarkets, this is a case which will have ground-breaking repercussions.