Susie Al‑QassabAsda’s pay discrimination case will be causing severe headaches for the company and its legal team in particular. Subject to any appeal, the next stage of the case will require Asda to provide a reason, not related to sex, for the difference in pay (material factors defence).
Asda’s lawyers will no doubt be heavily scrutinising the Employment Tribunal’s ruling against high street retailer Next who lost at this very stage last year. Like Next before them, Asda’s defence will be centred around establishing and evidencing other differences between the retail and distribution sector which justify the pay disparity between their respective employees – likely a combination of arguments to do with market forces, recruitment and retention, productivity and commercial necessity.
However, as we have already seen in the Next case, financial justifications alone will not be enough to satisfy the ‘objective justification’ defence to indirect discrimination.
Specifically, differences generally in market rates or pay structures across the sectors are not going to be enough if those are inherently discriminatory. The whole point of the legislation is to address unfair pay practices and not allow businesses to perpetuate them.
It is clear from the Next case that cost-saving alone won’t be enough to justify lower remuneration, there needs to be a more compelling case for the decisions made, or approach taken to staff remuneration.
Even if there is a legitimate need to cut overheads, it doesn’t automatically follow that paying a lower salary to retail workers is a proportionate way of achieving that.
A tribunal will weigh up the business need to cut costs versus the discriminatory effect of paying lower salaries to predominantly female staff. What could Asda have actually afforded? What alternatives were there? These will be interesting questions to be answered.
Other retailers (and businesses more generally) would be well-advised to look at pre-emptively getting their houses in order. The positive outcomes for workers against Next, and now Asda, with other major UK retailers with cases coming down the track, will likely galvanise other workers and their representatives or unions to take action.
Stage one would be for businesses to audit and assess whether they have roles which tend to be segregated based on gender and which are not equally remunerated but could be regarded as having equal value. If unequal pay for equal value exists, and it can’t be objectively justified (which case law has shown is a high bar) it is better to face up to it and take corrective action in collaboration with staff and unions.
Equal pay rights are only going to be strengthened under the current Labour Government. The Government proposes to extend UK gender pay gap reporting to cover ethnicity and disability and extend the right to make equal pay claims to black, Asian and minority ethnic workers and disabled workers.
Employers should therefore be thinking ahead and would be well advised to start taking steps now to ensure that their staff pay practices are fair and justified. We are seeing more private businesses adopting a ‘public sector’ approach to pay in terms of grouping job roles into salary bands and ensuring that all within a band which are ‘rated as equivalent’ are paid the same.
Big businesses – and small – cannot justify wage disparities through cost saving arguments alone. The UK law demands equal wage for equal work – and this latest case should serve as a wake up call that differentiations will be taken seriously.
Susie Al‑Qassab is senior consultant at Bellevue Law
