Case law | Recent development in equal pay for Asda employees

The Supreme Court handed down its long-awaited judgment on Friday 26 March 2021.

The ET, EAT and Court of Appeal had decided that the relevant employees (retail workers) were entitled to compare themselves with distribution employees in other establishments under section 79(4)(c) of the Equality Act 2010 (and section 1(6) of the Equal Pay Act 1970 as regards earlier periods).

Underhill LJ, hearing the case at the Court of Appeal, said that the preliminary issue here (i.e. were they able to use the distribution employees as comparators) was a simple one and much of the detailed evidence and argument on this specific point was unnecessary.

The Supreme Court dismissed the appeal, meaning that Asda has now failed at all stages regarding this preliminary issue. Lady Arden summarised the existing caselaw on the subject of “common terms”.

The crucial test being whether there were common terms between comparators at their establishment, and the comparators if they were working in an appropriate part of the claimants’ establishment. Cases that do not meet this test, in her view, are likely to be exceptional.

Where no comparator works at the claimants’ establishment and common terms do not apply, it may be necessary to conduct a hypothetical exercise to determine whether the terms are common (“the North hypothetical”, established by Dumfries and Galloway Council v North [2013] ICR 993), by asking whether, assuming that the comparator was employed to do his present job in the claimants’ establishment, the existing terms and conditions would apply.

Lady Arden confirmed that an appropriate approach to take is to prevent equal pay claims from being unduly stopped at the preliminary stage by an employer allocating groups of employees to separate sites so they have different terms, even where this is discriminatory because the difference in terms is not due to a genuine difference of location.

The Court’s decision does not mean the claimants’ claims for equal pay succeed. At this stage all that has been determined is that they can compare themselves with distribution employees in other establishments. It remains to be decided whether the retail employees do work of equal value with their comparators and, if so, the extent of any differential and whether Asda has a ‘material factor’ defence.