Background to the case

The UK’s law on equality, the Equality Act 2010 (EqA), states that men and women should receive equal pay for equal work. Employees can compare themselves with a comparator of the opposite sex who is performing either the same work or work of equal value.  

Current and former employees at UK supermarket Tesco who work in the store, who are mainly female, have brought equal pay claims against Tesco. They are contending that their work is of equal value to that of employees working in Tesco’s warehouse, who are mostly men. The two types of job are done at different places, meaning there is a question as to whether it is possible to compare the roles. 

A recent similar decision of the Supreme Court (SC) with another UK supermarket, Asda, ruled that a comparison between work at different locations could be made, because the UK Employment Tribunal (ET) had decided that the warehouse employees would (theoretically) have been employed on the same terms as their current terms, even if they had been employed at the same location as the shop workers. Therefore the comparison could be made for the purposes of equal pay law.  The SC said there was no reason to go against that ET decision. However, although the SC said that this should not be complicated, the EqA provisions on comparisons are rather difficult to understand.

In the Tesco case, the claimants argued something slightly different (and simpler).  They wanted to rely directly on EU law instead which allows a comparison to be made between different types of employees if there is a “single source” that is responsible for setting their pay. This approach means that it doesn’t matter if the employees do different jobs in different places, so long as a single employer is responsible for ensuring equal pay. The EqA does not contain the “single source” test.

The ET hearing the Tesco case asked the highest European court, the European Court of Justice (ECJ), to rule on whether EU law can be used directly to make this comparison. Tesco argued that this was not possible in the UK, under UK law, for equal pay cases. 

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The ECJ’s decision

The ECJ ruled that EU law imposes obligations on employers to ensure both equal work and work of equal value, and this is a key principle of the EU. The wording is clear and precise, which means that this particular EU law can be relied on directly by individuals in equal pay claims in the national courts.

The ECJ also confirmed that where unequal pay can be linked to a single source, the work and the pay of those workers can be compared even if they work in different places. EU law can be relied upon by national courts in equal pay claims where work of equal value is carried out by workers in different locations of the same employer, as long as that employer is the single source for setting pay.

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Implications: ECJ decision post-Brexit?

This decision potentially makes it much easier for equal pay claimants to make comparisons to employees in different jobs in different locations. The SC’s decision in the Asda case had already indicated that that comparisons like this should not be complicated, with the SC describing this as a “threshold test”. The EU single source test is even simpler to apply – claimants in the UK can now rely on it in all types of equal pay claim, so long as one single employer is able to sort out any pay inequality.

This is an ECJ decision delivered after Brexit, the UK’s exit from the EU. Although the Brexit legislation means that direct EU legislation in force immediately before Brexit remains part of UK law afterwards, the UK courts and tribunals do not have to follow ECJ decisions which are made after the end of the Brexit transition period, but can take account of them if relevant.

This means that the EU law that can impose obligations on employers for equal work is can still be relied on by UK claimants, but the UK courts and tribunals do not necessarily need to follow this new decision of the ECJ. In practice, it is highly likely that ETs would follow this decision in relevant cases, but in due course there may be more arguments about not following it in the higher UK courts.

It is important to remember that this is only the first stage of the equal pay claims in this case. The next step is to consider whether the roles are of “equal value” and, if so, whether any difference in pay is because of a “material factor” that is not a sex discriminatory factor.

The effect of the Tesco and Asda decisions is likely to be that legal arguments in equal pay cases will focus more on these potentially complex issues instead of arguments about location.

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We have extensive experience advising on equal pay issues and the related issue of gender pay gap reporting.

If you have any specific questions you would like advice on, then please contact: Abi.Frederick@lewissilkin.com or koichiro.nakada@lewissilkin.com of Lewis Silkin LLP.