Equal pay: beware the mass claims

As many Scottish employment solicitors are aware, after years of legal wrangling and negotiations, mass equal pay claims in the public sector are finally being settled and many have proved very costly to employers. With unions and other organisations now turning their attention to the private sector, practitioners, HR leaders and business owners must ensure their clients and companies take steps to mitigate reputational and financial risk damage from large-scale lawsuits.

Terms and conditions in the public sector are generally the subject of collective agreements between the employer and trades unions. In the private sector, equal pay claims have generally been brought by individuals where a particular comparator is thought to be paid more than the claimant. But that is now changing, and the recent case of Asda Stores v Brierley UKEAT/0011/17/DM (31 August 2017) illustrates the much larger risks represented by mass claims brought about by occupational segregation.

Truly comparable?

In this significant equal pay decision, the EAT has reaffirmed that female workers in Asda’s stores can compare themselves to higher paid male workers in Asda’s distribution centres. The retail workers are pursuing “work of equal value” claims. Similar claims have been brought against other supermarkets.

In reaching its decision, the EAT considered the application of the “single source” test, which requires that male and female workers have their pay and conditions set by a single source before they can make equal pay comparisons. Asda argued that a comparison could not be drawn as pay rates were set by different bodies using different methods. The judge rejected this, holding that “this was an ordinary case of a large organisation delegating the setting of pay to separate internal organs”. Asda’s executive board had the overall power to restore equal pay and so a single source existed. 

Additionally the EAT found that it was not relevant in this case that the men and women were employed at different establishments in different locations. The history of the different pay rates was also not relevant, even though the distribution centres were more heavily unionised and had collective agreements.

The journey for this case is likely still to have a long way to go. First off, Asda is appealing to the Court of Appeal (due to be heard by October 2018), and this preliminary point could well end up before the Supreme Court. Assuming the employees continue to be successful, the tribunal would then need to decide whether the work carried out by both groups is indeed of “equal value”. Asda is maintaining that the pay rates differ for legitimate reasons, including the market rates for different jobs in different sectors.

Global risk

Needless to say, matters of discriminatory pay practices are not confined to the UK and do not exist only in the lower paid, public or retail sectors. 

Three women, former employees of tech giant Google, are pursuing a class action suit in the state of California. They allege that Google systematically discriminated against its female employees, paying them less than their male counterparts, and that they had limited opportunities for career advancements.

This class action suit highlights that even a global company often perceived as forward thinking and progressive, can face claims in relation to equality. 

How to resolve the problem?

It is rarely the case that an employer will deliberately set out to pay roles in which women predominate less than roles where men predominate. However, intention is no defence and wherever occupational segregation appears, claims look set to ensue.

There are several steps that can be taken to address these issues. Where one gender is underrepresented in a particular role, an employer can take positive action to improve the gender balance, for example by reconsidering where it advertises or providing particular training courses for the underrepresented gender. It is also open to an employer to use underrepresentation as a “tie break” in recruitment.

Another option is to undertake a valid job evaluation of all roles. This is likely to ensure that any discrimination built into pay practices over the years is eradicated, by properly evaluating the various tasks carried out. It should also provide a defence to any subsequent claims.

The Asda cases should encourage all large employers to consider their pay practices urgently. These assessments and evaluations will not only protect their organisations, but also help make them fairer employers. Ultimately, this is the aim of the law, and companies stand to benefit by making the most of the women in their workforce and potential talent pools.