Judgment was handed down on 26 March 2021 by the Supreme Court in the case of Asda Stores Ltd v Brierley and others [2021] UKSC 10. It was held that employees working in Asda’s stores can use as comparators employees working in Asda’s depots for the purposes of an equal pay claim.
Daisy van den Berg has written a case summary following the judgment.
Background
The claimants are employed in Asda’s retail business. They are predominantly women, whereas the distribution employees working in Asda’s depots are predominantly men. The depots are on separate sites from those on which Asda’s retail operation takes place.
Asda’s executive board oversees the processes by which terms of employment are set. Retail employees receive a package of terms set by internal processes, whereas the remuneration of distribution employees is arrived at by collective bargaining. It was common ground that the pay is less favourable in retail than in distribution.
The Appeal
The claimants brought an equal pay claim. The question whether the retail employees could use the distribution employees as comparators was tried as a preliminary issue. The claimants succeeded before the employment tribunal (Case No. 2406372/2008). Asda unsuccessfully appealed first to the Employment Appeal Tribunal ([2018] ICR 384) and then to the Court of Appeal ([2019] ICR 1118).
Before the Supreme Court, there were some 35,000 claimants. The question on appeal was whether the “common terms” requirement for the purposes of equal pay legislation, namely s. 1(6) of the Equal Pay Act 1970 and s. 79(4) of the Equality Act 2010, was satisfied.
The Decision of the Supreme Court
Lady Arden, with whom all other members of the Court agreed, said that the authorities show that what is required is simply (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 the “North hypothetical” (Dumfries and Galloway Council v North [2013] ICR 993) 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 the same site as the claimants. The terms need not be identical, and tribunals should not entertain a detailed, line by line comparison of terms.
Under the North hypothetical, where an employee’s terms are tied to their location so that they would acquire the other establishment’s terms on transfer, they are not common terms. But, if the comparators’ core terms would be unaltered by the hypothetical relocation, then the common terms requirement is satisfied and they may be relied on. The test is intended as a “fail safe” to eliminate those comparisons where it is clear at the outset the differences are due to geography.
There is no requirement that the transfer should be a realistic possibility or that it should be feasible. The employment tribunal was therefore permitted to envisage a depot next to the retail store at the claimants’ establishment.
The employment tribunal was entitled to reject Asda’s evidence that a distribution employee would be employed on retail terms if they were moved to a retail location. The tribunal relied on the inherent probability that distribution employees would not accept less pay than they were entitled to at their establishment. Accordingly, the claimants could succeed on the North hypothetical.
At this stage all that has been determined is that the claimants can use terms and conditions of employment enjoyed by the distribution employees as a valid comparison. They must still show that they performed work of equal value. Asda will be able to rely on any defence open to it, including the statutory defence that the difference in pay was due to a material factor which was not itself discriminatory on the grounds of sex.
The Court cautioned that the threshold test in respect of common terms is intended to ensure that employees at establishments of the same employer whose terms and conditions of employment are genuinely different for geographical (or possibly historical) reasons are not used as comparators. Cases where the threshold test cannot be met are likely to be exceptional, and an employment tribunal should not countenance a prolonged enquiry into the test. If, in the absence of firm case management, the threshold test is elevated into a major hurdle mirroring other elements of an equal pay claim, the purpose of equal pay legislation will be thwarted, and the pay disparities will not be investigated.
Ben Cooper QC represented Asda Stores Ltd, instructed by Gibson, Dunn & Crutcher.
