The recent decision in ASDA Stores v Brierley is the next episode in the long-running saga in which thousands of predominantly female retail workers are bringing equal pay claims citing distribution staff, who are predominantly male, as their comparators. This time the issue was whether the ET in Manchester had been correct in holding that the comparison was valid. Daphne Romney QC considers the judgment.
ASDA has some 630 stores employing 133,000 employees. It also owns and operates distribution centres across the UK, employing some 11,600 employees. The ET heard that there was a complex history – some centres had always been operated by ASDA, and some by third parties, and that there had been different terms and conditions between them, often set locally. However, since 2003, ASDA had directly operated and run all its distribution centres (currently 24). The retail division did not recognise trade unions at all. The situation was different in the distribution division which had concluded an agreement for collective bargaining with the GMB. The comparators enjoyed higher pay and more favourable terms including overtime and paid meal breaks.
The claimants had a number of ways of establishing comparability. First, they could show that their claims fell within Art. 157 TFEU (formerly Art. 119, then Art. 141) and that there was a “Single Source” capable of rectifying the inequality – in this case, ASDA’s Executive Board. Second, they could show that under s. 1(6) EPA (now s. 79 EqA) that they either enjoyed common terms and conditions with their comparators or, on the hypothetical basis (however unlikely) that if a comparator were to transfer to do his present job at a claimant’s place of work, he would largely retain his present terms and conditions (“the North hypothetical”). Employment Judge Ryan upheld all these grounds. ASDA appealed to the EAT. Kerr J (sitting alone) handed down his reserved judgment on 31 August 2017.
Direct applicability of Art. 157
Article 157 TFEU provides that: “Each Member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied”. It was common ground that in claims of like work, Art. 157 (and its predecessors) had direct effect – see Defrenne v Sabena and McCarthy’s v Smith. However, ASDA contended that the same was not true of claims for equal value unless there had been a prior concession to that effect or where a job evaluation scheme had rated the work as equivalent. Although Worringham v Lloyds Bank suggested that the principle applied to equal value claims, ASDA argued that the language in the judgment, namely “discrimination that can be judicially identified” precluded equal value claims because the ET could not make a determination without expert evidence so that there was no identification of equality. ASDA further argued that several senior judges had (albeit obiter) cast judicial doubt on the principle of direct effectiveness in such cases, namely Lord Oliver in Pickstone v Freeman Balcombe LJ in Leverton v Clwyd and Lord Eason in City of Edinburgh v Wilkinson. It further relied on Van Gend v Loos where the ECJ said that in order to be directly effective, the measure in question had to be unconditional and sufficiently precise.
The ET held that it did determine equal value and further pointed out that it was not obliged to accept expert evidence and could make its own decision. Kerr J found the decision to be a difficult one and not acte clair. The question was whether the language in Art. 157 was sufficiently precise as posed in Van Gend. On balance he held that were the CJEU to hear the case today, it would hold that there was direct effectiveness. Whilst he would have “enthusiastically” referred the matter to the CJEU, he left it to the Court of Appeal to decide whether a reference was necessary.
A “Single Source” exists where the claimant can show that there is a body responsible for setting the terms of both claimants and comparators – as the ECJ put it in Lawrence v Regent Office: “a body responsible for the inequality and which could restore equal treatment”. It is not necessary to show that this body originally set the terms or that it maintains day to day control. Many large companies devolve day to day management but this is not the test. The test is who has the ultimate say – see Fox Cross Claimants v Glasgow City Council. ASDA relied on Robertson v DEFRA where the Government had expressly devolved its powers to determine salary to individual departments and contended that it’s retail and distribution divisions were wholly separate with each determining its employees’ salary and terms. As such, there was no “Single Source”. ASDA also contended that a “Single Source” required not only the same body responsible for setting the terms but the same establishment. Here, it maintained that terms and conditions were set separately even if they were approved by the ASDA board and / or Walmart, its parent company.
The ET distinguished Robertson because both retail and distribution operated under the authority of the Executive Board and because Government departments operated differently from a Board of Directors. Both divisions were subject “to a degree of oversight so that there was control in practice as well as in theory”. Kerr J agreed, finding the Employment Judge’s conclusions “unassailable” and noting that Robertson was “wholly exceptional”. It was quite enough to show that there was regular scrutiny by the board.
- 1(6) EPA provided that a comparator (B) must either work in the same establishment as the claimant (A), (in which case it does not matter whether they have the same terms and conditions) or work in another establishment of the employer or an associated employer “at which common terms and conditions are observed generally or for employees of the relevant classes”. Its successor, s. 79 EqA is in slightly different language. Ss. 79(4)(c) provides that common terms and conditions apply “either generally or as between A and B”. ASDA argued that there were essentially different employment regimes for retail and distribution staff. The ET held that the common terms were broadly similar and that a broad comparison meant that there should not be a too narrow a focus on the contractual terms. It expressly rejected the argument that common terms could not be common where they had been negotiated separately; to accede to that submission would mean that the legislation could be subverted, in particular if an employer chose to indulge in separate negotiations in order to defeat the operation of the Act.
Kerr J held that the Employment Judge’s conclusions were not perverse or wrong in law. ASDA was wrongly conflating different establishments and different terms. The fact that a woman and a comparator worked at different establishments did not mean that they enjoyed different terms and conditions; nor did it matter that the terms and conditions had a different genesis and history. This accorded with Lady Hale JSC in North v Dumfries & Galloway Council.
The North hypothetical
This refers to the hypothesis in North that should a male comparator be transferred to do his work at the claimant’s place of work, however unlikely that hypothesis, the ET must decide whether he would continue to work on his previous terms and conditions or the claimants’ terms and conditions. ASDA contended that in this case, the ET had to ask “do Distribution terms apply to those doing depot jobs in stores and do Retail terms apply in retail jobs in depots?” .
The ET was unpersuaded that a hypothetical man from the distribution staff would be willing to accept less favourable terms or that his willingness was the right test or that any geographical test applied – if it did, the comparison would be actual and not hypothetical at all. Kerr J found that there was no error of law and no perversity or impermissible speculation. In particular, he noted that the Employment Judge had properly taken account of evidence that when distribution staff had been seconded to work in stores, they had retained their own terms and conditions.
The final ground of appeal rested on the change of wording in s. 79 from s. 1(6) as set out above. ASDA argued that from 1 October 2010, when the EqA came into effect, the change of wording meant that the North hypothetical had been repealed as the section now omitted reference to the words in s. 1(6) EPA “or for employees of the relevant classes”. The Employment Judge rejected this, holding that there had been no suggestion, including in the Explanatory Notes to the EqA, that there was any change intended between the two sections; that the wording was to make the language consistent within the Act; and that ASDA’s interpretation (supported by the IDS Handbook on Equal Pay (2011)) would be contrary to Art. 157. Kerr J pointed out (correctly) that the Explanatory Notes have no legal force, but concluded that, on balance, the Employment Judge had reached the right conclusion.
This case will undoubtedly be appealed. ASDA has to date appealed every aspect of the ,claim as, no doubt, the stakes here are enormous. 7,000 claimants were involved in this appeal and there are more with civil court claims. Given that the case now involves the possibility of a reference to the CJEU on direct effectiveness, the claimants’ progress will suffer yet further delays. However, whatever the position on Art. 157 (the writer respectfully agrees with Kerr J), it is suggested that the ET’s and EAT’s interpretation of domestic law is correct. ASDA’s suggested construction would narrow the arc of comparison between claimants and comparators who work in different jobs in different sections, a consequence inimical to the spirit and purpose of equal pay legislation.
  ICR 567
  ICR 672
  ICR 592
  AC 66 at 124B-F
  AC 706 at 723H – 724D
  IRLR 202 @ paras. 40-42
 Paras. 17/18
 Para. 31
 Para. 37
  ICR 1092
 [2014[ CSIH 27
  ICR 750
 Paras. 56/57
 Paras. 88/90
  ICR 993 at para. 12
 Paras. 113-117
 Para. 124