Asda has suffered another blow in the long-running equal pay litigation brought on behalf of thousands of employees. A recent tribunal found that Asda employees in 12 of 14 store-based roles are performing work of equal value to employees working in warehouses and distribution centres.
As most of the store-based workers are female and the warehouse workers are predominantly male, Asda is now exposed to an equal pay claim. This potentially affects up to 60,000 individuals, so if, at the next stage of the tribunal process, the equal pay claims succeed and the tribunal makes an award it is expected to cost the retailer up to £1.2bn in back pay, and an estimated increased annual pay bill of £400m.
This finding follows the equal pay claim against retailer Next, which resulted in it being instructed to pay £30m in back pay to its store-based employees, in addition to annual payroll increases.
It is understood that Next intends to appeal the decision on the basis of another material factor being the reason for the difference in pay rates rather than gender, and that Asda is also raising similar legal arguments in this ongoing claim. Suggestions on what could be the material factor include the different market and recruitment pressures, which affect in-store retail jobs and warehouse work.
It is important that equal work should be given equal pay. Case by case, the retail industry is being reminded of this. The latest news from the Asda case is not surprising. There are four more equal pay cases with similar facts making their way through the employment tribunal system, against Co-op, Morrisons, Sainsbury’s and Tesco, which will likely also result in the tribunal finding in favour of the employees.
The total industry bill payable to employees as a result of these equal pay claims is expected to be as high as £8bn. As costs are rising following changes to employer national insurance contributions and an increase to the national minimum and living wage, it seems inevitable that these judgments, assuming any appeals fail, will lead to a reduction in the number of roles in these industries for employers to mitigate against the increase to their wage bills.
The latest tribunal finding also serves as a reminder that, to avoid costly litigation, employers should ensure that they consider current remuneration packages to ensure that equal work is given equal value. Employers should pay particular attention to roles where there is a gender imbalance and consider whether the work being undertaken by employees may amount to work of an equal value and address that in pay reviews.
This article was first published in Employee Benefits and can be accessed here.
Charlotte Gunn