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Equal Pay Disaster

About The Author

Hannah Larsen (Writer)

Hannah graduated from the University of Bristol in 2013, with a LLB Hons. Hannah works for an organisation issuing multinational employers with guidance on employment law and labour relations across the globe, and is undertaking her BPTC part-time at BPP Holborn.

In November 2014 the Office of National Statistics (ONS) published the provisional results of its Annual Survey of Hours and Earnings revealing that men are paid, on average, 19.1% more than their female counterparts. Being paid the same as colleagues who are completing the same work as us concurs with our basic understanding of fairness. But more than that, equal pay is an emotive topic, as for most it is a key indicator of how much we and our work are valued by an organisation. The Minister for Women and Equalities, Nicky Morgan, proclaimed in the Government’s response to the ONSNovember statistics that she was ‘delighted’, as this is the smallest gender pay gap to have been recorded since monitoring began. But the truth is, we are still struggling. Just 3 months ago, claimant-centric law firm Leigh Day revealed that over 19,000 ASDA employees had approached the firm after its role in an upcoming equal pay test case was announced; staggeringly these employees account for approximately 11% of ASDAs total workforce.

When monitoring began in 1997 the gap was recorded as 27.5% and over the years we have seen the slow reduction of this figure (disregarding an increase of 0.1% in 2012). There are difficulties in recording true-to-life statistics, due to the impossibility of accounting for all of the variables affecting pay, including an employee's continuous service and the overall proportion of men in a particular job. This is further complicated where employer pay systems are not transparent or they are uncooperative in providing data. Nevertheless, it has been possible for some trends to be identified. For example, the Government press release identified the fact that men “tend to work in better paid sectors than women” as a key contribution to the gender pay gap. The statistics also highlight that even when women make their way into the ‘better paid sectorsthey are generally paid less.

It should be noted that on occasion a reverse gender pay gap can be seen, that is when men are paid less than women. Interestingly the ONS statistics revealed that female part-time workers are generally paid 5.5% more than men, although this is a decline from the 5.9% difference recorded in 2013. Further, women aged 22-29 earned 1.1% more than men of the same age, although the usual trend resumed after the age of 30, which the ONS identified in 2013 as the most common age for women to bear a child. In addition, statistics published by the Chartered Institute of Personnel and Development in 2012 revealed that in recent years more men (2.4% compared to 0.05% of women) have become unemployed as a result of the recession. 

Dis-ASDA

In April 2014 Leigh Day revealed that it would be representing 400 ASDA employees in an equal pay test claim regarding wage differences between shop floor staff and warehouse distribution workers. The controversy arose as an overwhelming number of the warehouse workers are male and the shop floor staff female.

The claims were not a surprise to ASDA, as 300 employees, represented by the trade union GMB, had already begun proceedings in Manchester and Liverpool in 2008. Interestingly, GMB is the only trade union that ASDA workers are permitted to join. GMB were persuaded by ASDA to discontinue representing the employees in exchange for ASDAs undertaking to engage with a ‘working party; what this actually amounted to and its success is best known to them.

In 2008, The Grocer reported that warehouse workers were being paid up to £3 per hour more than the shop floor staff, although Leigh Day believe this may have increased to £4. Either rate could amount to a substantial repayment if employees are successful in their claims for back pay covering up to the last 6 years.

ASDA employees will be hoping to prove the gap between the two rates of pay is illegal by reference to the Equality Act 2010 which prohibits discrepancies between the pay of men and women who are completing comparable work. The right to equal pay was first formulated by the Equal Pay Act 1970 pre-dating the general prohibition of sex discrimination by the Sex Discrimination Act 1975 by five years. To this day, the regimes addressing equal pay and sex discrimination are separate and dissimilar. 

To be successful in their claim, it will be necessary for the ASDA employees to identify a comparator of the opposite sex whose work is ‘equal’. Unlike discrimination claims, this cannot be a hypothetical comparator. Furthermore, the comparator must work for the same or an associated employer, at the same establishment or, where common terms and conditions apply, within a different establishment. Of course, here the comparison is being drawn between the shop workers and warehouse distribution workers, who are both employed by ASDA.

Section 65 of the Equality Act provides a broad definition of equal work, setting out that work can be ‘like, ‘rated as equivalentor ‘of equal value’ when compared. In Leigh Day’s initial release solicitor Michael Newman outlined the similarity of work:

We are very confident that the jobs are pretty much the same. In the warehouses they take stuff off the shelves, put it on a pallet and stick it on a lorry. In the supermarket, they do the reverse: take the pallets off the lorry, unstack them and put stuff on the shelves.

Although Newman outlines a blatant likeness between the roles of the two sets of workers, Leigh Day have stated in their media publication for the action that they will be seeking to establish that the work is of equal value’. It is questionable why Leigh Day have opted for this category after stressing how similar the case is, especially when considering that equal value’ is defined by the Equality Act as work which is not similar. Equal value is established with reference to factors such as decision-making, skill and responsibility, and is reserved traditionally for cases where the jobs are obviously different. For example the Equality and Human Rights Commission gives the comparisons of: nursing home sewing room assistant and plumber’ or school nursery nurse and local government architectural technician’.

In contrast, ‘like workis established by demonstrating that the work is of a broadly similar nature, having generally considered the role and skills or knowledge required for it. Whether there are any differences in the roles the nature, extent and frequency with which these differences occur is considered by the tribunal. The burden would have been on ASDA to show that these differences were of practical importance and on the facts, as presented by Leigh Day, this would seem to have been the more suitable category. Choosing to argue that the roles are of equal value will not bar any potential success for the ASDA employees, but it is questionable why, in an otherwise very strong presentation of the case, Leigh Day have opted to belittle the similarity

Regard will also be had to the terms and conditions of employment under which each group of workers are engaged. However, this is not an overall comparison, but an analysis of individual terms that relate to contractual benefits, e.g. pay. It is not unless ASDA raises the material factor defence as per section 69 of the Equality Act that a holistic view of any pay and benefits package will be taken. The defence gives employers the opportunity to suggest that any difference either does not involve treating employees differently on the basis of their sex (it may be that it is as a result of another material factor) or that the difference is a legitimate means of reaching a proportionate aim. It is at this point that differences in the working conditions will be considered, e.g. if the warehouse employees work predominantly at night.

Clearly confident in the chances of success, Leigh Day are actively encouraging more ASDA employees to make a claim, asking them to “join in” on a no-win no-fee basis. If the claim is successful thousands of employees could find themselves with payments to reflect backdated pay and worrying employers (not just ASDA) could find themselves hastily reevaluating their pay systems. Although in these particular circumstances employment law specialist Colin Leckey from Lewis Silkin has recognised that ASDA is an unusual position in hiring its warehouse workers directly as opposed to using outsourcing. If unsuccessful, Leigh Day will find itself writing off an extraordinary amount of billable time and will perhaps be quite red faced. Fundamentally however, the gender pay gap needs to be addressed and the ASDA case has and will continue to attract the publics attention.

Moving Forward

258 out of 266 members of the House of Commons recently voted to bring the formerly stagnant section 78 of the Equality Act into force, with the introduction of the Equal Pay (Transparency) Bill 2014-15. The section requires all employers with over 250 employees to publish pay data from which any differences between men and womens pay can be deduced. Whether the bill will successfully complete the entire parliamentary process, bearing in mind that it was raised in a Ten Minute Rule Motion, which only provided the backbench MP Sarah Champion with just enough time to introduce the topic and is likely to require government backing, is questionable. 

Even if the Bill does successfully complete the path to becoming an Act its impact on closing the gender pay gap is likely to be minuscule. The section's power is terminated prematurely as it does not provide any means of redress or penalty where a difference in pay becomes clear, seemingly relying on the figures themselves to shame the employers into taking action. Further, if ASDA are able to explain away the differences in pay in their upcoming litigation, it is likely that employers will similarly be able to do so for the purposes of section.

In the meantime the Government wastefully invests its time in the ‘Think, Act, Report’ programme, which encourages employers to voluntarily monitor and publish their pay records for the purposes of assessing gender equality within their organisation. Although the Scheme’s webpage provides an extensive list of assignees, The Guardian in fact notes the failure of the scheme, stating that only 5 employers had volunteered information in the last year.

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Tagged: Commercial Law, Discrimination, Employment Law

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