It has been more than 50 years since a strike by a woman who sewed a seat at a Ford car factory in Dagenham caused the passage of the UK’s Equal Pay Act.
A series of recent court decisions against large retailers who paid more warehouse workers than mostly female store staff can hold businesses liable for the payments of billions.
The ASDA appears to be the most exposed as claims involving more than 60,000 current and former employees move to the end stage. But Tesco, J Sainsbury, WM Morrison, and Co-op are all fighting similar claims. So far, the courts have largely been found courtesy of store clerks.
Lawyers say equal wage disputes in other sectors could escalate as women are more willing to challenge their employers.
“In the last two years, I have charged more equal wages than I have in the last 10 years,” said Jo Keddie, a partner at law firm Forsters.
“Employers live with it. Stephen Ratcliffe, a partner at law firm Baker McKenzie, added that the UK is taking the lead in enforcing the concept of equal pay for equally valuable jobs.
This concept was declared in law in the 1970s and means that women can bring their claims not only when their employers are less than men who do the same or similar jobs, but also when they are in another role that demands equally in terms of effort, skill or responsibility.
The Ford sewing machinists in Dagenham had campaigned to be given the same “skilled” wage grades as men who had comparable jobs elsewhere in the factory. Barbara Castle, then Minister of Employment, supported their cause and spurred legislation.
However, for the next few decades, the concept of equal value was hardly tested. This is because bringing a claim is a costly, three-stage process that takes years.
In the first stage, the court decides whether it can be compared to another job from the same employer. In the second stage, independent experts over job description details determine whether roles are equal in the maze process in which independent experts acquire them to obtain factors such as physical and emotional effort, skills, and decision-making.
The burden of proof passes to the employer during the third and final stages. Employers must demonstrate that there are objective reasons for wage differences that are not based on gender.
The wave of equal pay claims in the public sector began in the early 2000s after female chefs, cleaners and care staff performed job assessments showing that they were fewer than workers in jobs controlled by men who gather bins and repair roads.
These claims were driven by the efforts of lawyer Stephen Kross’ entrepreneurs. Stephen Cross considered the possibility of signing up thousands of female councillors workers to fight their claims on non-favourable standards.
When Birmingham City Council reaches an agreement to settle historic equal pay claims, it will be responsible for pushing it into bankruptcy.
But bringing such a long-term claim, “it only works because the numbers are huge,” he added. “We need a very large group of employees with standardized terms of service and have a very clear gender breakdown.”
Equal pay claims wreaked havoc on local government finances, particularly at labor management councils that tend to keep services home compared to conservative councils that embraced outsourcing. In the retail sector, this means that groups with internal distribution are more exposed.
Second, the clothing chain could become the first large private sector employer to face a rather large compensation bill after last year’s controversial stage 3 ruling. The Employment Court found that retailers “do not show any conscious or subconscious influence” when setting wages, but found that by claiming that it was simply “paying a fee” they could not justify the higher fees of basic wages and overtime.
The court said that if market forces can be used in this way as a “trump card” to allow indirectly discriminatory practices to be “permanently and legally maintained”, it would defeat the purpose of the law.
Other claims against retailers are early on, but the biggest single action involving more than 60,000 employees at supermarket ASDA reached a milestone last month when 12 of the 14 store-based roles considered by the court last month were found to be comparable to those held by male counterparts, primarily warehouses.
“We are aware that other large retailers and their workers are looking at us,” the judges said when stating their findings. Based on more than 11,000 pages of expert evidence, the judgement analyzed the requirements of each role in detail. Consider the skills, knowledge and judgments needed to flip pancakes, stuff them in donuts, and keep your fruit display fresh.
The GMB coalition, which supports the ASDA workers’ claims, said “mainly female retail labor is paid less than £3.74 per hour than mostly male warehouse workers.”
The ASDA ruling was told by campaigners as a sign of a long-deferred cultural change in order to recognize the true value of the work women normally do. “People have been waiting for a long time, and many will be happy with the outcome,” said GMB activist Karen Morell.
As the government prepares to expand equal pay rights to ethnic minority workers and disabled people, financial interests are high for employers as the EU brings new requirements to report and address pay gaps.
Leigh Day, a law firm that represents many claimants against ASDA and other retailers, estimates that the sector’s gross bill could exceed £8 billion. Tesco has the highest potential financial exposure, says Leeday, but the number of claimants for ASDA is currently large.
Next, we estimate that up to £30 million in compensation and refunds will need to be paid equal to existing workers.
Next CEO said losing appeals to last year’s ruling could result in the chain closing several stores. Lord Simon Wolfson argued that this was “not a threat” or “deprecating intention,” but simply resulted in increased operating costs, adding to other wages and tax cuts and long-term declines in high street sales.
Richard Lim, CEO of Consultancy Retail Economics, said the ruling was concerning for the industry that saw “an over-wave of disruption and a continuous wave of rising costs.”
Baker McKenzie’s Ratcliffe said the “huge” equal pay liabilities that local governments have generated have shown reasons why current retail sector cases “sue at the highest level for years.”
However, Paula Lee, Lee Day’s partner who represents the store clerk in his allegations against Tesco, said the recent ruling “sent a clear message of the direction of the trip.”
“If I were an employer, I thought I was a clicky, I thought I was, I’m in the tide now,” she said.
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“If there’s a concentration of women, we’ll find low wages,” Lee said, pointing to HR and IT as potential concerns for white-collar employers.
One way employers can preempt equal pay claims is to conduct workforce audits, benchmark roles, discover and address pay inconsistencies. But Keddie of Forsters said that companies that have performed equal pay audits “we don’t always like results” reflect another attorney.
“If you find a problem… you need to sort it out as quickly as possible. Charles Cotton, a senior advisor at the CIPD organization at HR Professionals, said: “In the end, it can cost quite a bit of money.”
