Could Tesco have avoided its £4 billion (U.S.$5.6B) unequal pay case

It all started in 2006, when claims by Birmingham City Council workers for equal pay were first filed. Home carers and school dinnerladies claimed they were doing equal work with binmen and road cleaners, but were on lower rates of pay. Carers and dinnerladies, of course, are generally female workers, while binmen and road cleaners were largely male employees. That case took six years to settle, with compensation eventually being paid in 2012. Then, in 2014, the same law firm that represented the council workers, Leigh Day, announced that it was taking legal action against supermarket ASDA. That case now involves almost 20,000 “underpaid” employees. Leigh Day then launched an action against Sainsbury in August 2015, a case which now involves around 1,000 workers. Now it has launched proceedings in the first equal pay claims against Tesco in “what is potentially the largest ever equal pay challenge in U.K. history, which could cost the supermarket giant £4bn [U.S.$5.6bn] to compensate workers,” according to the firm.

It is not difficult to see a pattern. What is difficult to understand is why no one employed at the supermarkets in these subsequent cases thought it might be a good idea to check to see if their employer was complying with employment law which required that equal work of equal value should be remunerated at the same rate. A quick check of Tesco’s Equal Opportunities Policy reveals that the word “pay” is not mentioned once, yet the supermarket claims to be an equal opportunities employer. It seems like a compliance failure.

The Tesco case, like the others, hinges on the argument that it is gender bias that leads to employees working in the predominantly male dominated distribution centres being paid considerably more than the largely female staffed Tesco stores. The distribution workers can earn in excess of £11.00 (U.S.$15.4) an hour while the most common grade for store staff is paid around £8.00 (U.S.$11.2) per hour. Leigh Day calculates that this pay differential would see a full-time distribution worker earning over £100 (U.S.$140) a week, or £5,000 (U.S.$7,000) a year more than store staff. The first claims have been submitted to ACAS, the Advisory, Conciliation and Arbitration Service, the first stage in the Employment Tribunal process, for about 1,000 employees so far. But the underpayment might cover more than 200,000 Tesco employees, which is why the estimated total costs are as high as £4 billon (U.S.$5.6bn).

“We believe an inherent bias has allowed store workers to be underpaid over many years. It is nuanced and complex but we do need to change how we measure work and value work.”
Paula Lee, Employment Lawyer, Leigh Day

Tesco cannot claim that it was not warned. In June 2016, an Employment Tribunal found that lower-paid female ASDA workers could compare themselves to higher paid men who work in ASDA's distribution centres. A judgment in October of that year ordered ASDA to start paying compensation, but the supermarket is appealing the decision. said: “In terms of equal worth to the company there really should be no argument that workers in stores, compared to those working in distribution centres, contribute at least equal value to the vast profits made by Tesco ...” ASDA refused to settle any of the cases at the ACAS level.

Amendments to the Equality Act in October 2014 mean that employment tribunals have the power to order employers to conduct equal pay audits when they are found to be in breach of the equal pay provisions of the Equality Act 2010. Ironically, back in 2013, ASDA commissioned consultancy Global Diversity Practice to help it break down barriers to women moving forward in leadership roles, but it appears to have failed to apply this enlightened policy to equal pay for women; something that could be a costly error.

Apart from the numbers of workers involved, another reason these claims are so expensive is because of a Supreme Court ruling back in October 2012, in which the same law firm, Leigh Day, won the right for equal pay claims to be brought in the High Court up to six years after a worker leaves employment where pay discrimination may have occurred. This judgment also extended the time limit for equal pay claims from six months to six years, a development that was described by the firm as “the biggest change to Equal Pay legislation since it was introduced in 1970, with huge implications for thousands of workers.” In all these cases, claimants are entitled to six years’ worth of back pay to compensate for the difference in earnings.

Indeed, not only Tesco, Sainsbury’s cannot say it was not warned. A 2014 press release from Leigh Day about the ASDA proceedings noted that: “Other supermarket chains that also own their distribution centres include Sainsbury's and Morrisons.” Morrisons, take note. But even more incredibly, Michael Newman, a discrimination and employment law expert at Leigh Day, said Sainsbury’s had faced a similar case, brought by a woman working in its Lewisham store in south London, which was settled in 1989. It found that the roles of warehouse men and shopfloor workers were consistent at the supermarket—meaning pay should be equal. Newman continued: “In the supermarkets the check-out staff and shelf-stackers are mostly women. The people in the warehouses are pretty much all men. And, as a whole, the group that is mostly men gets paid more. Our investigations suggest that the jobs are pretty much the same, in that warehouse staff are responsible for taking items off shelves, putting them on pallets and loading them into lorries. In the supermarket, they do the reverse: taking the pallets off the lorries, unstacking them, and putting the items on the shelves. Where the jobs are not similar, we still think they are of equal value.”

Paula Lee, part of the employment team at Leigh Day, summed up the situation, saying: “We believe an inherent bias has allowed store workers to be underpaid over many years. It is nuanced and complex, but we do need to change how we measure work and value work.”