It has been more than 50 years since a strike by the women who stitched seat covers at Ford’s car plant in Dagenham sparked the passage of the UK’s Equal Pay Act — and employers are finally starting to see how far reaching the legislation could be.
A series of recent court rulings against big retailers that have traditionally paid warehouse workers more than predominantly female store staff could leave the companies liable for payouts running into billions.
Asda looks most exposed, as a claim involving more than 60,000 current and former employees moves into its closing stages. But Tesco, J Sainsbury, Wm Morrison and Co-op are all fighting similar claims — and so far, the courts have largely found in store workers’ favour.
Lawyers say there is potential for equal pay disputes to escalate in other sectors as women are increasingly willing to challenge their employers.
“In the last two years I’ve done more equal pay claims than in the last decade,” said Jo Keddie, a partner at the law firm Forsters.
“Employers are alive to it . . . in a way they weren’t previously,” said Stephen Ratcliffe, partner at the law firm Baker McKenzie, adding that the UK was now taking the lead in enforcing the concept of equal pay for work of equal value.
This concept, enshrined in the 1970s legislation, means women can bring claims not only when their employer pays them less than men doing the same or similar work, but also when they are in a different role that is equally demanding in terms of effort, skill or responsibility.
Ford’s sewing machinists in Dagenham were campaigning to be given the same “skilled” pay grade as men doing a comparable job elsewhere in the factory. Barbara Castle, then employment minister, backed their cause and drove through the legislation.
Yet for decades after, the concept of equal value was largely untested — because bringing a claim is a costly, three-stage process that takes years.
In the first stage, a tribunal decides whether one job can be compared with another at the same employer. The second stage determines whether roles are of equal value, in a labyrinthine process where independent experts tussle over the details of job descriptions and score them for factors such as physical and emotional effort, skill or decision-making.
In the third and final stage, the burden of proof shifts to the employer, who must show they have an objective reason for differences in pay that is not based on gender.
A wave of equal pay claims in the public sector began in the early 2000s after councils conducted job evaluations that showed female cooks, cleaners and care staff were routinely being paid less than workers in male-dominated jobs collecting bins and mending roads.
These claims were fuelled by the entrepreneurial efforts of a lawyer, Stefan Cross, who saw the potential to sign up thousands of female council workers and fight their claims on a no-win, no-fee basis.
When Birmingham city council reached an agreement to settle its historical equal pay claims — incurring liabilities that helped push it into bankruptcy — it had to book sports halls and bus in Acas conciliators to help the workers sign their deals, according to employment lawyer Darren Newman.
But bringing such long-running claims “only works because the numbers are huge”, he added. “You need very large groups of employees on standardised terms and conditions, with a really clear gender breakdown.”
The equal pay claims have wreaked havoc on local authority finances, especially at Labour-run councils that tended to keep services in house compared with Conservative councils that embraced outsourcing. In the retail sector, it means groups with in-house distribution are more exposed.
Next, the clothing chain, could be the first big private sector employer to face a sizeable compensation bill, after a contentious stage 3 ruling last year. The Employment Tribunal found that while the retailer had shown “no conscious or subconscious gender influence” in setting pay, it could not justify higher rates of basic pay and overtime in warehouses by arguing it was simply paying the “going rate”.
The court said it would defeat the purpose of the legislation if market forces could be used as a “trump card” in this way, as it would allow indirectly discriminatory practices to be “lawfully sustained in perpetuity”.
Other claims against retailers are at an earlier stage, but the biggest single action, involving more than 60,000 employees of the supermarket Asda, reached a milestone last month when a tribunal ruled that 12 out of 14 store-based roles it had examined were of equal value to those held by mainly male counterparts in warehouses.
“We are . . . aware that other large retailers and their workers are watching us,” the judges said in setting out their findings. Based on more than 11,000 pages of expert evidence, the judgment dissected the demands of each role in minute detail — weighing up the skill, knowledge and judgment required to flip pancakes, inject filling into doughnuts or keep fruit displays fresh.
The GMB union, which is backing the Asda workers’ claim, said the “predominantly female retail workforce is paid up to £3.74 per hour less than the predominantly male warehouse workforce”.
The Asda ruling was heralded by campaigners as a sign of a cultural shift, long overdue, to recognise the real value of work typically done by women. “People have been waiting a long, long time — a lot of people will be happy with that result,” said Karen Morrell, a GMB activist.
The financial stakes are high for employers, as the government prepares to extend equal pay rights to ethnic minority workers and disabled people, and as the EU brings in new requirements to report and address pay gaps.
Leigh Day, a law firm representing many of the claimants against Asda and the other retailers, estimates the total bill for the sector could exceed £8bn. Tesco’s potential financial exposure is highest, Leigh Day says, although the number of claimants against Asda is currently larger.
It estimates that Next could have to pay up to £30mn in compensation and back pay, and to equalise terms for existing workers.
Next’s chief executive has said the chain may close some stores if it loses an appeal over last year’s ruling. Lord Simon Wolfson insisted this was “not a threat” or “meant to sound mean” — but would simply be the consequence of increased operating costs, coming on top of other wage and tax increases and a long-running decline in high street sales.
Richard Lim, chief executive of the consultancy Retail Economics, said the rulings were a worry for an industry that had seen “excessive waves of disruptions and successive waves of rising costs”.
Ratcliffe at Baker McKenzie said the “enormous” equal pay liabilities local authorities had incurred showed why the current retail sector cases would be “litigated for many years at the highest level”.
But Paula Lee, a partner at Leigh Day representing store workers in their claim against Tesco, said the recent rulings had “sent a clear message of the direction of travel” that ought to put other employers on high alert.
“If I were an employer, I’d be thinking, crikey, the tide is coming in now,” she said, adding that equal pay problems could be festering in any sector where roles were gender segregated.
“Where there are high concentrations of women you will find low pay,” Lee said, pointing to HR and IT departments as potential areas of concern for white-collar employers.
One way for employers to pre-empt equal pay claims is to conduct an audit of their workforce, benchmarking roles to spot any discrepancies in pay and address them. But Keddie at Forsters said companies that conducted equal pay audits “don’t always like the results” — echoing another lawyer, who said clients were asking how to check if they had an equal pay problem without creating any paper trail that might have to be disclosed later in court.
“If you find a problem . . . you have to sort it out as quickly as possible. There is no grace period,” said Charles Cotton, senior adviser at the CIPD organisation for HR professionals. “When you do eventually look, it could be quite a large amount of money.”
