Equal pay and the private sector

Equal pay claims have to date mainly been focused on the public sector with thousands of claims being brought before the Employment Tribunal service by teachers, council workers and NHS staff. This sector however has now largely ‘caught up’ and effectively put its house in order.

The private sector has been largely untouched by such claims but with the number of equal pay claims in the public sector gradually dwindling, trade unions are turning their attention to the private sector and group actions are being launched to assert claims.

One of the earliest such cases was brought against Asda Stores by more than 7,000 Asda employees. A recent Court of Appeal decision has rejected Asda’s application for the claims to be heard in the High Court rather than the Employment Tribunal; this means that the Asda litigation will now proceed before the Employment Tribunal and could pave the way for many more claims of a similar nature.

The claimants, the majority of whom are female shop floor staff, allege that they are underpaid in comparison to their male counterparts who work in the distribution centre. Counsel for Asda has dubbed the case ‘by far the most important, complex and financially significant equal pay claim ever pursued in the private sector’ and if Asda loses this case it could have to pay the claimants the difference in earnings going back six years.

The Equality Act 2010 enshrines the principle that men and women should receive equal pay for equal work. A so-called ‘sex equality clause’ is implied into every female employee’s contract of employment, to the effect that any less favourable terms are replaced with more favourable terms found in a male comparator’s contract. However, this clause does not operate where an employer demonstrates that the difference in contractual terms is not based on gender, but on some other material difference. It is Asda’s case that pay rates for shop floor and distribution centre jobs differ for legitimate reasons, including the different market rates for each.

If the claimants are successful in this case, other companies (most notably supermarkets or those who own and operate distribution centres) may also be susceptible to similar equal pay claims. Employers should seek to protect themselves from potential equal pay claims by conducting a risk assessment of their current pay structure and considering a pay audit. This is good practice in light of the forthcoming introduction of the obligation to publish gender pay gap data. Employers with more than 250 employees must publish this data within 12 months of 30 April 2017. Further information about gender pay gap reporting can be found in our previous blog.

If you have any questions regarding this topic or any employment issue, please contact Linky Trott – Partner, or any member of the Edwin Coe Employment team.

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