Legal experts have warned that the Tesco £4 billion equal pay case could open the floodgates for more large private sector claims.
Almost 100 Tesco employees have launched a group claim asserting that the value of the work female shop floor workers do, which sees them earn up to £3 an hour less than male warehouse staff, is comparable to these warehouse jobs. As many as 200,000 women who work in Tesco stores could receive back pay totalling £20,000 each if the claim is successful.
A similar claim was launched against Asda, with a Manchester employment tribunal ruling in 2016 that female employees could compare themselves to male staff in Asda’s distribution centres.
The most high-profile equal pay cases of recent years have until now concerned the public sector. Birmingham City Council is now liable for more than £1 billion pounds in payments after settling an equal pay claim from women employed as cleaners, cooks and carers who claimed their work was of equal value to that of binmen and male street cleaners.
“There is a concern that the potentially £4 billion Tesco claim means the levee for equal pay claims in the private sector will finally break,” commented Paul Quain, a partner at GQ Employment Law.
“Up until fairly recently large equal pay claims have been virtually unknown in the private sector while being relatively common in the public sector. Unions have been happy to fund these cases in the public sector, but less so in the private sector where union membership is much lower.”
Quain said a key factor in the shift was the technology now available to help organise support for group claims. “Social media like WhatsApp and Facebook make it very easy to pull together and manage a group of claimants from the grassroots level – you no longer need a union to organise claimants,” he said.
He added that UK law firms also now appear to be increasingly willing to take on the cost risk of group claims without the support of union funding. “As the risk appetite of UK law firms increases we expect that more group claims will follow – following the US model where these kinds of claims are far more prevalent in the private sector,” he said.
Crowley Woodford, an employment partner at law firm Ashurst, warned that this could prompt a “tidal wave” of claims.
"The Tesco employees are trying to capitalise on the success of the Asda ruling,” he said. “If the Tesco employees are equally successful then all major retailers, and indeed businesses more generally, could be exposed to a tidal wave of equal pay litigation."
Helen Watson, head of employment law at Aaron & Partners, said that April’s looming gender pay reporting deadline is also a factor.
"The spotlight is now firmly on gender pay gap reporting and I expect we will see a lot more cases like this emerging in the months ahead,” she warned. “It's clear that the glass ceiling exists in many companies, and there is clear inequality in what women at all levels of employment are receiving in terms of remuneration and opportunity.”
She added: “Our advice to the business community is that it’s important to review the gender pay gap now and seek legal support and advice. The equal pay claim against Tesco could see them hit with an eye-watering bill of up to £4 billion and it is a stark example of what could apply, albeit on a smaller scale, to smaller businesses anywhere in the UK.”
“Equal pay claims are legally complex, can be difficult to settle early and can drag on for years as people jump on the bandwagon long after the initial launch,” added Quain. “The Asda equal pay claims have been running since 2014 and are far from over.”
"It may be too late for Tesco to remedy this situation, but there are likely to be hundreds of businesses out there who have similar pay practices within their organisation whether they openly know it or not,” added Donna Martin, partner at Mackrell Turner Garrett.
She advised businesses: “Do not hesitate, act now and seek professional assistance if you need it. Claims such as these are not only costly, but they could have a significant impact on your company’s reputation.”