How a slow burning legal battle could cost UK supermarkets millions
Britain’s supermarkets are struggling through tax and turmoil, as well as ongoing supply chain issues. But quietly in the background, an ongoing legal battle is unfolding that could cost them millions of pounds if successful.
Claimant law firm Leigh Day launched several group legal actions seven years ago against the UK’s well-known stores, including Asda, Co-op, Morrisons, Tesco, Sainsbury’s and Next.
The main scope of the claims focuses on the salaries of sales consultants, most of whom are women, compared to the staff in its warehouses, which is predominantly male. The salaries for those who work in stores are deemed to be lower hourly pay rates than those in warehouses, which was alleged to be sex discrimination.
All of the retailers deny these allegations and are each defending against the claims.
Philippa Dempster, senior partner and head of retail at Freeths, explained: “Equal pay claims are sometimes easy to spot where contractual job roles are very similar, especially when these employees work in close proximity.”
“The current wave of claims are much less obvious and is brought on the basis that the individuals perform equal work or work of equal value, even though their set roles are different,” she added.
Seven years later and these cases are slowly being dragged through the Tribunal. As Erica Aldridge, legal director at Kennedys, noted, “Equal pay litigation is notoriously slow and complex.”
Despite that, the claimant groups got a spring in their step last August after fashion retailer Next lost a major landmark ruling in its legal battle over this matter.
Next had argued that gender did not come into the issue of what wages it paid its staff in each location. However, the Tribunal ruled that a company cannot use a market rate alone as a defence in an equal pay claim if that rate perpetuates sex discrimination.
This ruling resulted in headlines for Next, with Leigh Day stating that the retailer could be forced to pay out as much as £30m, given that it has 3,500 current and former staff on its books.
It’s therefore unsurprising that Next was quick to seek an appeal on this ruling, given how much this decision could cost the high street giant.
The decision will also mean even more “large-scale equal pay claims to continue”, says Aldridge, as the claimant law firm and its funders see a light at the end of the tunnel.
Leigh Day stated that it filed the pay claims against the supermarket giants on behalf of 112,000 staff members.
And it isn’t stopping at trying to get even more people to join its legal battle against the retailers. Last week, I wrote a story about Tesco returning to court as it sought to overturn a legal decision ahead of a final trial in its unequal pay battle.
From that, my algorithm has decided to push not one, but three separate adverts to “join the claim” against Tesco, alleging “Tesco equal pay claim up to £30,000. Claim back six years of pay”.
Despite never having worked for Tesco, one of the ad videos I was shown while on my daily walk had nearly 9,000 likes, showing there is an appetite from people to join these type of actions.
Litigation and lawyers are expensive, and this issue can be complex. Businesses, especially retailers, must be vigilant in their pay practices.
Tom Herbert, associate at Collyer Bristow, explained: “It’s no longer sufficient for employers to justify pay disparities based on job titles or outdated market norms. The focus has shifted to whether roles are equivalent in skill, effort, responsibility and working conditions.”
While Alex Elliott, a lawyer at Birketts, warned: “Employers should carry out regular equal pay audits and ensure that any genuine non-discriminatory reasons for differences in terms are documented and supported by evidence.”
This comes on top of the other heap of employment laws all businesses need to keep up-to-date, as Labour’s promise to hand workers a glut of new rights from ‘day one’ slowly moves through the steps at the House of Lords.
But however the case ends up, the real winners are employment lawyers — demand for their expertise has never been higher.
Eyes on the Law is a weekly column by Maria Ward-Brennan focused on the legal sector.