Tesco is the latest retailer to face multiple equal pay claims. What should we expect next?
At the moment the potential claims are in the mandatory pre-claim conciliation process and Tesco has said it is not able to comment on claims it hasn’t received.
According to press reports, the claims, if they are lodged, will be worth £4bn.
In case anyone was in any doubt, these latest claims show that the retail sector is the new hotspot for multiple equal pay claims, now the wave of mass equal pay litigation in the public sector – mainly against local councils and the NHS – has largely receded.
Many commentators believed the financial services sector would be next in line, but apart from some high-value individual claims, this has not been the case.
Instead the spotlight has swung clearly onto retailers where, as with local authority cleaners and dinner ladies comparing themselves with male binmen and street-cleaners, there are large groups of staff in roles of predominantly one gender.
For businesses already operating on very thin margins in the retail sector, this poses a very significant challenge.
A hard, long route to prove equal value
Equal pay can be claimed for equal work where gender plays a part in the pay differentials.
Under the Equality Act 2010, equal work can be shown in three ways, where the jobs being compared are: 1) like work (the same or very similar work); 2) rated as equivalent under a job evaluation study which has measured the various components of the roles and rated them equivalent; 3) of equal value.
“Even if the claimants can show their work is equal, Tesco would then have the opportunity to show the difference in pay was down to a material factor which doesn’t discriminate on gender grounds”
Even if the claimants can show their work is equal, Tesco would then have the opportunity to show the difference in pay was down to a material factor which doesn’t discriminate on gender grounds.
For example, market forces may support higher wage rates for particular roles, but if the market itself is discriminatory, this defence is problematic.
Of the three ways to show equal work, equal value is the hardest and longest route. It involves an employment tribunal, or more usually, a job evaluation expert instructed by the tribunal, evaluating the relevant roles, in the same way as a job evaluation study would do.
This process can take many months or even years, depending on the number of job roles being compared.
Given the amounts at stake – nearly three times more than Tesco’s group operating profit last year – it is likely to be in Tesco’s interests to look for other points to challenge before getting on to the central issues of whether the work is equal and material factor defences.
This has been the pattern in most mass equal pay litigation – for example, disputing whether multiple job comparisons can be included on single claim forms, challenging the basis for comparison across different sites.
The women seeking to take on Tesco may find that equal pay is more easily asserted than obtained, particularly where it’s based on equal value. They will need to be prepared for the long haul.
Tesco on the other hand will need to be clear on its strategy from the start.
Once the claims are lodged, the claimants will have preserved their position, potentially recovering up to six years’ back pay and future pay for as long as the pay difference continues.
The clock will be ticking for Tesco with any equal pay exposure increasing while it goes unaddressed. They will need to use that time wisely to find a long-term solution to any gender pay inequality.