Tesco the latest Company to face questions over unequal pay

In today’s post, the focus will once again be on the massive retailer Tesco, with news this time relating to a potentially record-breaking claim making its way up the legal ladder. We looked on Tuesday at the protracted fraud case involving Tesco executives, which subsequently collapsed, but today the retailer is making the headlines as part of a concerted legal push against a number of the top supermarkets in the U.K., all on the same basis. In this post we will assess the particulars of the claim, and look at the potential effects for the retailer, and the sector moreover.

On a number of occasions here in Financial Regulation Matters, we have assessed the concepts of equality and equal-pay between the genders on a number of occasions, with most posts focusing upon the lack of diversity within companies (see here, here, and here). Today’s post however focuses on the claim from the law firm Leigh Day, acting as a representative for potentially more than 200,000 Tesco staff, that female shop-floor staff earn much less than their male counterparts working in the warehouse/distribution sections of the company; the firm claim that the resolution of this case could cost Tesco more than £4 billion in compensation to those affected. The firm is not only taking action against Tesco, with action against Sainsbury’s and Asda already well under way on the same grounds. Although it may obvious to those who have any connection to anti-discrimination law in the U.K., it is worth noting that the claim is not based upon the suggestion that Tesco has been paying men more than women for exactly the same job (which flout every anti-discrimination law); the case hinges on the concept of ‘equal value’. Essentially, the question for the employment tribunals, where the Sainsbury’s and Asda cases are and where the firm hopes the Tesco case will go, is ‘is the work performed by those on the shop floor of equal value to that of a ‘comparator’ i.e. ‘someone of the opposite sex doing a job perhaps traditionally seen as more physically demanding’. The technicalities will no doubt be difficult to establish, but the claims by many shop-floor workers revolve around the actual aspects of their jobs; they too have to do manual-based work, whilst also performing a customer facing role – for this they receive £8 per hour, whilst their distribution centre counterparts earn up to £11. In the media today, there has been reference to the leading case in this particular field when Birmingham City Council were forced to pay out £1 billion in 2010 on similar claims, but that case has many different aspects to these cases; this case, and the other two against Sainsbury’s and Asda relatively speaking, are at a very early stage with Tesco not even commenting yet, so there will be plenty of twists and turns (and legal ‘strangulation’) left on these particular stories. So what then may be the effects of these cases?

The effect of success on the part of the claimants in this case could indeed be significant, not only on Tesco but the entire sector; for those with distribution arms to their business, the prospect of making sure pay is equal across the sectors will have an immediate effect by way of compensation claims, but then a longer term effect upon one of the two ‘groups’ for want of a better word. If the claim was to be successful, one would surely imagine that distribution centre workers would see their pay decrease, rather than shop-floor employees see their pay increase, which will have a number of effects. However, the impact upon the equal pay movement that is currently engulfing organisations like the BBC could be even more significant, and for the better. As with all movements of this type, there is a need for defined victories, and having the law find in the favour of the claimants here would be a massive and important victory in the long road to the eradication of unequal pay. Yet, whilst these developments should encourage, one should expect these gigantic corporations to defend their position vehemently, meaning the required change may be some way off. Nevertheless, today was a small step in the right direction on a critical journey.

Keywords: Equal Pay, Discrimination, Tesco, Business, society, politics, Asda, Sainsbury’s, Law, @finregmatters.