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Image: Asda

The United Kingdom’s Supreme Court issued a widely anticipated decision this month in the class action lawsuit that has seen more than 40,000 employees of Asda Group Ltd. accuse the English retail chain of pay discrimination on the basis of gender. Dismissing Asda’s latest appeal and upholding the 2016 decision of the United Kingdom’s Employment Tribunal in the process, the Supreme Court held that the Asda retail employees – most of whom are women – can be compared to the predominantly-male distribution center staff for the purposes of determining pay. While Asda argued that the two sets of laborers are subject to different employment terms and conditions, and thus, the retail employees’ case should be tossed out, the court decided otherwise. 

The heavily-watched case – which is the UK’s biggest equal pay claim and one that lacks “precedent in the private sector,” according to the plaintiffs’ counsel at Leigh Day – got its start back in April 2014 with a pool of 400 Asda employees, a number that has grown by more than 40,000 employees since the initial filing. Following a handful of favorable outcomes for the plaintiffs, including wins before the Employment Tribunal, Employment Appeal Tribunal, and a Court of Appeal, Asda made one more attempt at an appeal by seeking the intervention of the Supreme Court, which ultimately sided with the supermarket employees. 

In their March 26 decision, which is being characterized as a landmark win for the plaintiffs, a panel of judges for the Supreme Court stated that the Asda employees “seek compensation on the basis that in the six-year period prior to commencing proceedings in 2014, they received less pay than a valid comparator for the same work” – with those “comparators” being Asda employees employed at the Walmart subsidiary’s distribution depots, the majority of whom are men. While the Asda retail employees, who are mostly women, argued that they should be paid at the same rate as Asda’s distribution center employees, Asda has repeatedly sought to have the case tosses out of court on the basis that the two sets of employees are subject to different terms and conditions, and thus, cannot be neatly compared. 

“The essential question on this appeal was whether common terms apply between the [plaintiffs’] and comparator’s establishments, satisfying the common terms requirement in the equal pay legislation,” the Supreme Court stated late last week. On this basis, the court – which noted that this is “the first case involving a cross-establishment comparison where the claimants’ and comparator group’s terms are not fixed on both sides by collective bargaining agreements” – sided with the plaintiffs. 

Clarifying the “common terms” test, the Supreme Court stated that “the correct exercise is to make a broad comparison by asking whether the terms enjoyed by the distribution employees were substantially the same at the distribution depots and at claimants’ establishments,” holding that “the employment tribunal was wrong to perform a line-by-line comparison of the specific terms and conditions of employment of the distribution employees versus the retail.” 

Far from over, the Supreme Court stated that while the Asda employees have, in fact, prevailed in this round, the court’s “dismissal of [Asda’s] appeal does not mean that [the plaintiffs’] claims for equal pay succeed.” Instead, the court held that “at this stage, all that has been determined is that [the plaintiffs] can use terms and conditions of employment enjoyed by the distribution employees as a valid comparison.” 

The headline-making, which enables the case to advance further, “offers the country’s female retail employees fresh hope in an ongoing fight for equal pay, that could trigger billions of dollars in compensation claims,” Bloomberg’s Ellen Milligan wrote on Sunday, noting the court’s remarks that the ability to compare the job and pay of the female retail employees with the male staff in Asda’s warehouses is “important because otherwise an employer could avoid equal pay claims by allocating groups of employees to separate locations with different terms and conditions, even where this is discriminatory.

The case is particularly noteworthy in terms of the impact it can have on other retailers, “It would be difficult to underestimate the significance of this judgment, which will send shockwaves far beyond Asda,” Anne Pritam, partner and employment lawyer at Stephenson Harwood, said in connection with the Supreme Court’s decision. 

Reflecting on the relevant market trends, Freshfields Bruckhaus Deringer LLP’s Caroline Stroud, David Mendel, Catie Mulrennan, and Guy Huffen note that while “traditionally more associated with the public sector, large equal pay claims against private sector employers” – such as Asda – “are becoming more common and have been a feature of the employment law landscape in recent years.” They expect that the Supreme Court’s decision in this round “may well result in an increase in such claims in the future,” and given that “pay structures in the retail/warehouse context [are] particularly vulnerable, and potential damages [could] reach into the billions, this is certainly a topic to keep an eye on.” 

Not an isolated case, Boyes Turner LLP attorney Barry Stanton states that “equal pay cases are also ongoing against other retailers, including Sainsbury’s, Tesco and Next, where the mainly female shop floor and checkout staff are seeking to compare their roles for the purposes of equal pay, to distribution and warehouse workers, who are generally men and paid more.” He echoes the importance – and potential expansion – of these cases, asserting that “while the supermarkets and retail stores are currently in the firing line, other businesses can also expect employees to look at pay differentials, particularly with ongoing gender pay gap reporting” in the UK, which requires that companies with 250 employees publish information annually showing the difference in average pay between their male and female employees.

As for Asda, a spokesman for the company stated that the case is not over: “This ruling relates to one stage of a complex case that is likely to take several years to reach a conclusion. We are defending these claims because the pay in our stores and distribution centers is the same for colleagues doing the same jobs regardless of their gender. Retail and distribution are very different sectors with their own distinct skill sets and pay rates.”