Since the early 20th Century, the Tesco supermarket has graced our towns and cities as a family favourite for groceries, coining the famous slogan of ‘every little helps’. Like many other supermarkets of a similar size and notoriety, Tesco experienced an increase in profits during the first year of the pandemic and enjoyed a successful fiscal year. Despite this success, many female employees of the supermarket brand have not been entitled to a ‘share’ of the profits, in the form of a wage increase. Instead, a group of mostly female shop floor employees have seen a wage disparity of £3 an hour, in contrast to the male warehouse worker comparators.
This blog post will explore the decision made by the European Court of Justice in relation to an equal pay claim brought by a group of mostly female litigants. Other ideas that will be discussed in this blog are the challenges that many women encounter when trying to make an equal pay claim under the Equality Act 2010 and the implications of this on employer accountability. Furthermore, the blog will conclude by considering the reasons why this particular case is significant and what the decision means for the legal sector.
‘Equal Pay for Equal Work’ success for Tesco workers
Since the early 20th Century, the Tesco supermarket has graced our towns and cities as a family favourite for groceries, coining the famous slogan of ‘every little helps’. In October 2020, an interim report recorded a profit of £551 million before tax. This demonstrates a 29% rise from the same period in 2019 due to the focus on their online delivery service and trying to match prices with their Aldi rival. Despite the soaring profits for the company, a group of mostly female employees working on the shop floors were underpaid at an average of £3 an hour less than mostly male warehouse employees.
In a recent decision by the European Court of Justice, it was held that the EU ‘single source test’ can apply for the pay of the claimants to be compared to distribution centre workers. Applying the single source test has the ability to correct the pay disparity, rendering Tesco liable to pay £2.5 billion for an estimated 25,000 female employees.
Unequal pay that is related to sex is prohibited within the Equality Act 2010. S66 of this act inserts a sex equality clause which states that any contractual term that is less favourable than that of another employee is impliedly modified to change this. In theory, an unfair pay term should be impliedly reformed without the need to take legal action against the employer; however this is far from the reality.
In practice, there are several hurdles to overcome in order to bring a successful claim of unequal pay. This includes finding a comparator that works at the same or an associated establishment and undertakes equal work which can be similar, rated as equivalent or of equal value. Despite the complexity and rigidity of British law, EU law offers a simpler alternative of a ‘single source test’.
This means that when employees are employed by a single source, they are appropriate comparators in a claim of unequal pay. Therefore, the decision by the ECJ to allow this test to be used by the Tesco litigants simplifies the process of proving that they were unfairly paid for equal work in comparison to the male distribution centre workers.
Another result of this decision is that there is likely to be a greater burden of proof for Tesco to justify the disparity in pay, which would not only affect the pay of litigants but possibly many other underpaid female employees. This reinforces the notion of transformational equality, whereby super-giants such as Tesco are encouraged to recognise historical barriers that are preventing women from progression up the ladder and to mitigate this by making necessary changes.
The retail sector is no stranger to claims of unequal pay for female employees. In March of this year, the Supreme Court established that ASDA female shop workers can be compared to higher paid male warehouse workers. The easing of the rules regarding a claim of unequal pay is likely to give rise to more claims of unequal pay and prompt the retail sector to evaluate their pay structures and potentially change contractual terms to create equality between the sexes when their work is equal.
Historically women occupied lower paid occupations in certain industries due to family responsibilities and perceptions that women have a lower skill set than men. However, times have now changed with the average number of women pursuing higher education standing at 56.7% at an undergraduate level and 58.5% at a postgraduate level. Moreover, the female employment rate now stands at 71.8%.
In a time where the country is recovering from the economic recession caused by COVID-19, it is more important than ever for an equal playing field to be granted to all workers as the economy begins to bounce back. Therefore, employment lawyers are likely to be at the forefront of helping companies draft employment contracts that ensure fair pay between male and female employees and adopting policies that facilitate progression to senior positions.