Supreme Court’s equal pay comparison decision in the Asda case
With the Asda equal pay case currently being considered by the Employment Tribunal, this is a good point to reflect on the Supreme Court (SC) Judgment of March 2021, which specifically focuses on the equal pay comparator element which was a preliminary issue.
Whilst this of course, is just one component of the litigation, the ET will now have to consider whether the roles are of equal value and, if so, whether any difference in pay is due to a material factor which does not amount to sex discrimination.
The purpose of this blog is a deeper legal dive to consider some of key paragraphs to note from the judgment specifically with respect to the equal comparator element.
1. It is noted at paragraph 5, ‘the essential question on this appeal is therefore whether the common terms requirement for the purposes of equal pay legislation was satisfied.’
2. Paragraph 7: the SC did not conclude the claimants’ claims for equal pay succeeded but rather they could use ‘terms and conditions of employment enjoyed by the distribution employees as a valid comparison.’ There is still a requirement for the claimants to show they ‘performed work of equal value.’
3. Paragraph 16: considers s. 79(4)(a) to (c) EA 2010:
‘(4) This subsection applies if - (a) B is employed by A’s employer or by an associate of A’s employer, (b) B works at an establishment other than the one at which A works, and (c) common terms apply at the establishments (either generally or as between A and B).’
4. It was noted at paragraph 2 that ‘Parliament has not provided a definition of common terms.’ Thus, the courts, through case law, have considered the meaning of ‘common terms.’ The judgment considers three leading cases from paragraph 19 onwards. Paragraph 26 is of relevance with reference to Lady Hale’s summarised principles as drawn from case law such as Leverton and British Coal are cited. Namely, terms and conditions can be broadly similar rather than complete correspondence, as well as outlining the test.
5. Paragraph 5 states the important question for the SC to determine is ‘whether the common terms requirement…was satisfied.’ The requirement is:
‘(1) that the terms and conditions of employment of the comparators must be broadly the same at their establishment and the claimants’ establishment, and (2) that, if there are no employees of the comparator’s group at the claimants’ establishment and it is not clear on what terms they would have been employed there, the court or tribunal applies what is known as the North hypothetical and considers whether the comparator’s group would have been employed on broadly similar terms to those which they have at their own establishment if employed on broadly similar terms to those which they have at their own establishment if employed on the same site as the claimants.’
6. It was noted at paragraph 29, ‘this is the first case involving a cross-establishment comparison where the claimants and comparators’ terms and conditions were not fixed on both sides by collective bargaining agreements.’
7. Of the three cases considered by SC, it is noted there can be common terms under the same collective bargaining agreements as well as different collective bargaining agreements (paragraph 30).
8. Paragraph 34 notes the background detail as to why the remuneration at Asda of the two groups for retail and distribution is arrived at in different ways. It was noted at paragraph 35 the distribution employees are ‘employed on distribution terms; these were originally inherited from the contractors who provided supply services to Asda before it took the supply function in-house.’
9. Paragraph 36 notes the remuneration of the distribution employees ‘is arrived at by collective bargaining.’ It also notes each distribution depot was treated separately for wage negotiations but from 2012 Asda had a ‘national collective bargaining agreement with GMB for all distribution depots except Didcot…. Lord Pannick made a brief suggestion that the fact that there were differences as between depots might possibly be of some practical importance but with respect it is too late for that point to be taken on this preliminary issue.’
10. Paragraphs 56 and 70 are useful to consider with regards to the comparator test:
‘It follows that all the employment tribunal needed to do in this case was to make the assumption that the distribution employees could carry out their role at a location appropriate for this purpose at the claimants’ establishment, even if this was contrary to the fact. It could have achieved that by envisioning a depot next to the retail store at the claimants’ establishment. It then had to ask whether, on this assumption, the distribution employees would continue to be employed on the same or substantially the same terms as they were employed at their own establishment.’
‘Employment tribunals are not required by the common terms requirement to perform any form of line by line comparison of different sets of terms and conditions. In the present case, the tribunal became entangled in a document intensive line by line comparison between the terms and conditions of the claimants and those of the distribution employees (see paras 88, 89 and 106 of the judgment of Underhill LJ). As explained above, this was the wrong comparison in any event, but it is helpful to contrast it with the North hypothetical when the ultimate issue is simply whether the terms would be the same or substantially the same as those of the comparators in their own establishment.’
In conclusion, employers are advised to consider their pay practices, address annual gender pay gap discrepancies as well as look to identify differences in pay between similar level jobs across different sites. Consideration of appropriate comparators by employers at Tribunals is just one aspect of the litigation process.
The above does not constitute legal advice. Legal advice should be sought regarding your individual circumstances.