Tesco have joined the ranks of large employers, including Sainsburys and Asda, facing claims for equal pay. Our employment lawyer, Mary Goldsbrough, explains what this means for the store.
Nearly 100 female employees working in Tesco stores have submitted claims to Acas, stating that they should be paid the same amount as male employees working in Tesco warehouses. On average, store employees earn £8.00 an hour, while employees working in the warehouse earn between £8.50 and £11.00. Across the retail sector, women have historically undertaken sales assistant roles, with men taking the warehouse positions.
The Tesco employees are claiming that the work they perform in stores is work of ‘equal value’, under the Equality Act 2010, to the work the warehouse employees perform. To bring their claims, they must be able to show that the respective roles are of equal value to Tesco – considering factors like effort, skill, and decision-making.
In 2012, Birmingham City Council settled thousands of actual and potential equal pay claims, for an estimated cost of £1.1bn. Now, claims in the private sector roles may be worth less – particularly given their less generous pensions provisions. But, if the Tesco claimants are successful, up to 200,000 store workers, most of whom are women, could be in line for significant amounts of back pay – which could still prove extremely costly for Tesco.
Employers who face equal pay claims have what is known as the ‘material factor defence’ if they can prove that a difference in pay is due to a material factor, not an individual’s sex. Employers often argue that differences are down to skills shortages, red circling of pay, or geographical differences. These are, however, often difficult to apply to cases like this, which involve large numbers of employees at various locations.
There are a number of steps that employers can take to avoid equal pay claims, like undertaking job evaluation schemes and equal pay audits.
However, the rules relating to equal pay and assessing what is ‘work of equal value’ are complex and as a result, many businesses simply ignore them. But equal pay is coming under scrutiny more and more at a time when the gender pay gap is also a hot topic. As a result, it’s likely that in coming years we will see more equal pay claims being brought against businesses which have separate shop floor and distribution workforces.
Tesco is facing Britain's largest ever equal pay claim and a possible bill running to £4bn. Thousands of women who work in Tesco stores could receive back pay totalling £20,000 if the legal challenge demanding parity with men who work in the company's warehouses is successful. Lawyers say hourly-paid female store staff earn less than men even though the value of the work is comparable. Tesco said it worked hard to ensure all staff were paid "fairly and equally".