The EAT has upheld a decision of the Employment Tribunal that 7,000 female retail workers working at supermarkets were entitled to compare themselves to male distribution workers working at depots.

This comparison was permitted under the Equality Act 2010 as the workers could be said to have common terms.  It was also permitted under Article 157 of the Treaty on the Functioning of the European Union given the presence of a single source responsible for the terms and conditions and any pay inequality (Asda Stores Ltd v Brierley and others, EAT).

Background law

Equal value claims

The Equality Act 2010 contains provisions designed to achieve equality between men and women in pay and other terms of employment, where the work of an employee and his or her opposite sex comparator is "equal". There are three different ways in which an employee's work will be equal to that of their comparator's. This will be the case where their work is:

• like work; or
• rated as equivalent; or
• of equal value.

In equal value claims two apparently quite different jobs can still be of equal value, by reference to factors such as the employee's effort, skill and decision-making. An Employment Tribunal would assess whether the roles are of equal value by way of a 2-stage process, which often involves hearing independent expert evidence.

In addition to our domestic law, Article 157 of the Treaty on the Functioning of the European Union (TFEU) sets out the principle that "men and women should receive equal pay for equal work of equal value". The scope of this provision is potentially wider than the provisions in the Equality Act 2010. This provision is also vertically and horizontally directly effective, which means it can be directly relied upon by a private sector employee in a dispute with their employer.

Appropriate comparators

An appropriate comparator in an equal pay claim could be:

• Someone of the opposite sex who works in the same establishment for the same or associated employer, even if their terms of employment are different. For example, a female retail assistant and a male merchandiser who work at the same clothing store but with different terms and conditions.
• Someone of the opposite sex who works at a different establishment, but for the same or associated employer, provided that common terms and conditions of employment apply (in this context "common terms" means broadly similar terms – there is no need for them to be identical). For example, a female retail supervisor at a high street store and a male shift supervisor at an out of town warehouse, both employed by the same company and with broadly similar terms and conditions.

Where "common terms" are required, the test is to look at the terms and conditions of the proposed comparator on one hand and the terms and conditions that the proposed comparator is, or would be, on if employed at the employee's establishment (this test is known as the "North hypothetical"). For example, would the terms of the male shift supervisor at the out of town warehouse still be the same if he worked at the same place as the female retail supervisor working at the high street store.

Where a claim is founded on Article 157 of the TFEU the potential comparators are wider. Here, employees must show that they work in the same "establishment or service" as the proposed comparator, but they do not have the same employer or even an associated employer. The comparison is allowed provided that their terms and conditions and any differences in pay are attributable to a "single source" who is responsible for any inequality in pay and capable of remedying it.

Facts

In the biggest equal pay claim in the private sector to date, some 7,000 female supermarket workers brought equal pay claims against Asda. The claimants allege that their work is of equal value to male distribution workers based at depots located elsewhere.

A key preliminary issue is whether the female workers are entitled to compare themselves to the male distribution workers. Asda's position was that they are not appropriate comparators because they were subject to distinct pay regimes and did not share common terms. They also argued that the claimants could not rely on Article 157 of the TFEU as it was not directly effective but, in any event: (i) a single establishment was still needed and this was not present; and (ii) there was no single source responsible for any pay inequality.

At a Preliminary Hearing, the Employment Judge found that the proposed male comparators were appropriate under both domestic and EU law. It was held that:

• Applying the "North hypothetical", broadly similar terms would apply if the distribution staff did their work at the retail store locations. In other words, the claimants and the comparators could be said to have common terms. The Employment Judge reached this conclusion notwithstanding the fact that the female retail workforce did not have their terms set through collective bargaining, whereas the male distribution workforce worked under terms collectively agreed by the GMB union.
• Article 157 was directly effective, there would be no need for a single establishment and there was a "single source" of terms and conditions. The Employment Judge found that the terms and conditions of both workers were implemented and operated by Asda's Executive Board. All those responsible for setting terms in both the retail and distribution parts of the business were authorised by, and ultimately answerable to, the Executive Board.

EAT decision

Asda appealed, arguing that the distribution workers were not appropriate comparators for several reasons, including because the two pay regimes were distinct; Article 157 could not be applied in an equal value claim when equal value had not yet been determined; the "single source" argument on its own was insufficient and there needed to also be a single establishment, collective agreement or statutory framework; and that various findings of facts were perverse.

The EAT dismissed all of Asda's grounds of appeal and agreed with the Employment Judge that the female supermarket workers were able to compare themselves to the male distribution depot workers at different geographical locations, even though they had separately agreed terms and conditions.

Comment

As the biggest equal pay claim in the private sector to date, it is likely to be in the minds of unions and employees, particularly those operating within the retail sector. However, it is important to remember that this decision is limited to one specific preliminary issue about appropriate comparators in equal value claims.

It does not address the issue of whether the work of a female supermarket worker at Asda is of equal value to the work of a male distribution depot worker at Asda. Instead, it says that the female supermarket worker can use the male distribution depot worker as her comparator in an equal value claim. The complex question of whether their work is, in fact, of equal value is yet to be determined by an Employment Tribunal.

Asda has been given permission to appeal this decision to the Court of Appeal and there is also a possibility of a reference to the ECJ. Therefore, it is likely to be some time before we have final decision on the substantive claims.

In the meantime, employers who have any segregation in its workforce (i.e. where there has been physical separation between lower paid female roles and higher paid male roles) should consider auditing the respective terms and conditions to understand whether it could be said that there are "common terms" of employment. It should also consider who is responsible for setting those terms and whether a single source can be identified.

Asda Stores Ltd v Brierley and others