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In the light of the equal pay claim against Asda (going back 6 years), should smaller employers be worried?

Widely reported this weekend, solicitors Leigh Day are taking a test case on behalf of 400 workers at Asda….and if they win, the case will have immediate implications for all 172,000 Asda UK staff, not to mention those at other supermarkets with their own distribution centres. The real impact though could be significantly more far reaching, and all private businesses should take time to understand more about the case, and the implications for them.

In the public sector equal pay claims have been prevalent for years and local councils and other public bodies are well versed in job evaluations (‘ job sizing’) and appropriately evaluating the worth (in pay) of each role. In the private sector though, such practices are rare, confined usually to the largest of employers.

The concept of equal pay is relatively well understood, but most private sector employers don’t understand the meaning of ‘work of equal value’, the central theme of the Asda case. Asda employ a number of people in their supermarkets who remove products from pallets and place them on the shelves. This group, who are predominantly women, may also work on the tills. They are on average paid less than the staff who work in the distribution centre (and are predominantly men), who effectively have the reverse role – whereas the women take things off pallets, the men put them on pallets. The women argue that their role is ‘worth’ at least the same as the men’s roles and so they should be paid the same.

If the Manchester tribunal agrees (expect the case in the next couple of months) then Asda will face a pay claim to correct the difference stretching back for the last 6 years. There are already websites looking for ex-employees of Asda, who would also stand to gain from joining this action. You can understand why Asda, and all of the other retail giants are worried.

Whatever the outcome of the initial case we can expect appeals all the way up the legal chain, meaning that a conclusion is unlikely this year. The first outcome will however be significant, and if Asda lose we would expect to see many more similar cases and not just confined to the retailers and larger employers. The incentives for others to bring claims would be substantial. If for example female workers are paid, say £1,500 less than a male comparator, the claim would be worth £9,000 per employee – well worth their and their lawyers time.

So what should private sector employers do? There are some options, but the start point is to list all male and female employees and their earnings per hour, week, month etc.) to see if there are any obvious disparities on grounds of sex. If there are it’s important to understand where these come from – some roles will genuinely be worth more (and paid more) than others. And some won’t. Those employers with sufficient budget might consider a job evaluation exercise, smaller employers and those with limited budgets may choose to do a lower key analysis (either way myHRdept can help – please contact your HR Advisor to discuss.)

If a disparity that can’t be easily (and defensibly) explained does arise, there are some options:

  1. Calculate the scale of the underpayment, adjust wages as necessary and make a one-off payment (up to 6 years’ worth) to your employees, who will love you for ever. We call this the ‘John Lewis’ option, after the retailer paid up £40m in underpaid holiday pay due to a miscalculation. This option will remove the worry of future claims, the downside obviously is the cost.
  2. Fix the pay disparity, but don’t bother rectifying the previous loss (and keep your fingers crossed for a few months.) Likely again to be a popular move with the employees who will gain, and once 3 months has elapsed the employees may well be out of time to bring a claim in respect of the last 6 years.
  3. Do nothing and hope for the best. Many small employers may choose to await the outcome of the Asda case and trust that their employees won’t go to the time and cost of claiming against them. We do not advise continuing with an obvious pay disparity however.

And so finally equal pay claims have hit the private sector. Less commonly known is the fact that tribunals already have the ability to order private companies to publish pay data, a power that is normally invoked if the employer has lost a tribunal case, and if the tribunal suspects that discriminatory practices may exist in that company.

Prudent employers would be well advised to have a look at their pay practices now.

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