KEEPING IT SIMPLE… A blog by Daphne Romney QC on the Asda Stores v Brierley UKSC decision

The Supreme Court has finally handed down judgment in Asda Stores Ltd v Brierley[i]. But although it clarified and simplified the law concerning comparators at different establishments under s. 79 EqA, it left other questions unresolved. Daphne Romney QC considers the judgment.

And so we return to the everyday story of supermarket folk, Asda Stores Ltd v Brierley. Followers of this saga, now in its seventh year, will recall that the retail giant pays workers in its distribution division, who are predominantly male, between £1 50 and £3 00 an hour more than they pay workers in their retail stores, who are predominantly female. The claimants maintain that their work is of equal value with that done by the comparators; if that is correct (and it has yet to be established), they would be entitled to the benefit of the sex equality clause implied into their contracts of employment by s. 66 EqA, and as a result would be entitled to modification of any term in the comparators’ contract which is either more favourable than theirs, or which the comparators have but they do not. That process is of course subject to s. 69 EqA which provides that the sex equality clause does not operate where the employer can show a material factor which explains the difference and which is not connected, directly or indirectly, to sex.

But questions of equal value and material factor remain over the horizon and the claimants are still in the foothills of the litigation (although, in fact, the equal value process was under way. albeit subject to the outcome of this case). In order to carry out a comparison at all, a claimant has to satisfy two major hurdles; first, that a comparator is of the opposite sex – seemingly the only part of this dispute which has not been litigated – and second, that the comparator falls within one of the tests set out in 79 EqA. If the claimant and the comparator work in the same establishment, it does not matter whether they have the same, or different, terms (s. 79(2) EqA). But they may work in different establishments, and do not have common terms, which is frequently the case with multi-establishment employers, like large supermarket chains and local authorities, leading to hard-fought battles to stop equal pay claims in their tracks before issues of comparability and material factor are ever considered at all.

s. 79(4) EqA provides that comparison can be made where:

(a) B is employed by A’s employer or by an associate of A’s employer,

(b) B works at an establishment other than the one at which A works, and

(c) common terms apply at the establishments (either generally or as between A and B).

s. 1(6) of the Equal Pay Act 1970 (the EPA), the predecessor section, had different wording

….men shall be treated as in the same employment with a woman if they are men employed by her employer or any associated employer at the same establishment or at establishments in Great Britain which include that one and at which common terms and conditions of employment are observed either generally or for employees of the relevant classes.

Asda had previously relied on that difference, and in particular, the omission of the words ‘employees of the relevant classes’ in support of its argument that the comparison of terms was now between the claimant and the comparator, rather than across establishments generally or employees of a specific class, but the argument was given short shrift by Underhill LJ in the Court of Appeal[ii] and was not repeated before the Supreme Court.

Lady Arden’s judgment, on behalf of the Court, is notable for several features. First, there is no analysis of the EU law which underpinned the whole foundation of the introduction and development of equal pay legislation in the UK. Art. 157 and its predecessors, Arts. 141 and 119, do not feature – the only reference to EU law is in para. 6 of the Judgment, where she says that it is unnecessary to consider the principle of ‘single source’ derived from those articles, and which formed much of the basis of Lady Hale’s judgment in North v Dumfries & Galloway Council[iii]. This is truly a post-Brexit judgment.

In the Court of Appeal, Underhill LJ was clear that Lady Hale had been correct. He said at para. 53:

It is in fact clear …. that she envisaged cross-establishment comparisons being possible between very different kinds of operation of the same employer’.

And in paragraph 59, he said that:

In short, North is in my view binding authority that the fact that claimant and comparator have the same employer will in the ordinary case mean that the terms have a single source and thus that EU law permits comparison between them for equal pay purposes’.

Since Lady Arden’s judgment did not deal with EU law, there was no specific answer to Asda’s submissions on whether an employer which maintains separate, and apparently autonomous, divisions of the employer’s enterprise which set their own terms for their workforce, could escape the ruling in North. To the disappointment of many, the Supreme Court also failed to decide whether Robertson v DEFRA[iv] was rightly decided, and so the issue of whether autonomous departments can set their own terms but the overarching management of the whole still be a single source.

Second, Lady Arden emphasised that courts and tribunals should not be cautious in its interpretation of the EqA, relying upon the positive equality duties imposed on public bodies, the amended requirement on tribunals to order compulsory equal pay audits under s. 139A EqA in 2013 and the introduction of Gender Pay Gap Reporting in the private and public sectors in 2017. In paragraph 12, she said:

The Court is entitled to take account of the imposition of the positive duties described in this paragraph as part of the wider context in which it must interpret and apply the equal pay legislation. They show the determination of the legislature to make equal pay legislation and litigation effective and that determination is an aid to the interpretation of the legislation. The EA 2010 is inconsistent with any notion that Parliament thought it was time to take its foot off the pedal. The EA 2010 was preceded by a very careful and thorough review of equality law and there was wide public consultation. In the circumstances, there is no longer any need (if there was) to explore the provisions cautiously as might be the case if the provisions were novel. It is time to apply the provisions with confidence and unswervingly according to their terms, with Parliament’s purpose clearly in mind.

Again, therefore, she chose not to consider the obligations of EU law which informed previous equal pay decisions and the issues of interpretation arising from Art. 157 and the various permutations of the Equal Pay Directive. Rather her focus was on the obligations passed under the EqA in the past decade.

Third, like Underhill LJ in the Court of Appeal, Lady Arden was keen to steer the focus of equal pay claims away from the appetisers of s.79 EqA and onto the main courses, namely comparison of the work, whether a claimant’s terms are indeed less favourable than the comparators, and whether there is a material factor defence. In para. 6 of the Judgment, she noted that the progress of the Asda claims has been ‘markedly overcomplicated’ and that:

This judgment therefore provides guidance on future case management of issues raised by the common terms requirement involving a cross-establishment comparison.

The judgment reviews the three main cases in this area: Leverton v Clwyd County Council;[v] British Coal v Smith[vi]; and North. In Leverton, Lord Bridge laid down two important guidelines. The comparison of common terms is not between those of the claimant and her comparator, but between those of their establishments;[vii] and where, as in Clwyd Council, the same collective bargaining agreement covered both establishments, (which he described as the paradigm case’) it was not necessary for there to be ‘a broad similarity’ of terms[viii], as such a requirement would not promote the purpose of the legislation, which was to eliminate discriminatory differences in terms and conditions of employment.

In British Coal, women working at different collieries had similar terms to each other and men working at different collieries had similar terms to each other, but the terms between the men and the women were not the same. Lord Slynn held that what had to be shown was that the terms and conditions of employment of the comparators who worked at the same establishment as the claimants and at different establishments were common terms[ix]. He also posited that where there was in fact no comparator working at the claimant’s establishment at all, ‘then it has to be shown that like terms and conditions would apply if men were employed there in the particular jobs concerned’.[x] Rather unfairly to Lord Slynn, the hypothetical comparator test has since become known as the North hypothetical. He further held that in assessing whether those terms were ‘common’ (of which, unhelpfully, there is no definition in either the EPA or the EqA), they did not have to be identical, only ‘sufficiently similar’.[xi]

So after Leverton and British Coal, the principles appear to have been clearly expounded by Lords Bridge and Slynn; (i) the comparison is between the terms applied at different establishments, not between those of the claimant and the comparator; (ii) where there is no comparator working at the claimant’s establishment, then a hypothetical man should be used to decide whether he would work there on common terms with other establishments where that work was carried out; (iii) where the same collective agreements applied, detailed examination of the terms need not be made; and (iv) where they were not, the tribunal had to find broadly similar terms applied at the comparators’ establishments, but not identical ones. However, as Underhill LJ noted in para. 88 of his judgment in the Court of Appeal in Asda, those principles were generally not applied. This became clear in North, where the claimants worked in schools and their comparators worked elsewhere as refuse workers and leisure attendants. The EAT held that there had to be a ‘realistic possibility’ that the comparator would work at the claimant’s establishment. The Court of Session dismissed that test but applied a new one, namely that it had to be ‘feasible’ that he would work there. In the Supreme Court, Lady Hale pointed out that Lord Slynn had not referred to either test, and indeed, to any likelihood test; such a rule would undermine the Act, the purpose of which was to ensure equal pay for equal work. The fact that different work was carried out at different establishments should not present a barrier to equalising terms; men’s and women’s work had been long been differently valued preferring strength as more important than dexterity and the Act ought to iron out those ‘inequalities of reward’. Further, the comparison exercise came later, namely the one between the claimant’s and the comparator’s terms; the same establishment test was not concerned with comparability, but with threshold. [xii]

Lady Arden agreed with the Court of Appeal that where there are cross-establishment comparisons under s. 79, EqA, the North hypothetical will usually be unnecessary as long as there are common terms, whether between establishments or between relevant classes of employees (despite that phrase no longer existing). Where the North hypothetical was necessary, then the relevant test was whether if a comparator did work at the claimant’s establishment, his terms would be broadly similar with those of men doing the same job at other establishments. The Supreme Court did not give any guidance as to how that question was to be answered, despite Asda’s submissions during the appeal that some guidance was necessary, given the difficulty of the hypothetical exercise.

On the factual dispute of whether distribution workers working at a store would have worked on less favourable terms to their brethren working at the distribution centres, Lady Hale held that the employment tribunal was entitled to have reached its judgment that they would not

on the basis that it was contrary to the inherent probability to expect that distribution employees would accept less pay than they were entitled to at their establishment. Underhill LJ, with his considerable experience in this field, confirmed his own inclination to do so. Furthermore, despite Lord Pannick’s submission, I would hold that this is not mere speculation but the employment tribunal’s informed assessment of the proper inferences to be drawn from the totality of the evidence before it.

On the issue of the test for common terms, in paragraph 62 of the Judgment, Lady Arden agreed with Lady Hale in North that the same establishment test is ‘a threshold test with a limited function’, namely to ‘weed out’ comparators who cannot be used because the differences between them and the claimants are based on geographical factors, and possibly also historical factors. This test is taken from Lord Bridge in Leverton who explained that

“There may be perfectly good geographical or historical reasons why a single employer should operate essentially different employment regimes at different establishments.”[xiii]

The example Lord Bridge gave was where the claimant worked in Newcastle and the comparator in London, where the cost of living was higher. Lady Arden noted that these circumstances were likely to be exceptional; and in paragraph 63, she described it as ‘relatively incidental to the principal stages in an equal pay claim’. In paragraph 64, she defined the appropriate test for ‘weeding out’ unsuitable claims ‘can be achieved by asking whether the comparators would be employed on the same or substantially the same terms if they were employed at the claimants’ establishment.’

The judgment ends with some welcome guidance for employment tribunals in case managing equal pay claims ,which can be summarised as follows:

  1. If the employment tribunal hears evidence about the terms on which the comparator would work at the claimant’s establishment, that fact-finding exercise should be kept within tight bounds and the enquiry should not be prolonged. The best time to explore the difference in terms and the reason for it is at the material factor stage (para. 68).
  2. Inferences from relevant facts will usually be better than witness opinions on hypothetical facts (para. 69).
  3. Employment tribunals should not carry out line by line comparisons of the terms, as the employment tribunal did in this case (and worse, applied the wrong test by comparing those of the claimants and the comparators) (para. 70).
  4. Para. 71 bears repetition in full: ‘the aim of the equal pay legislation is to remove pay disparities that are endemic in some pay awards and which do not properly reflect the value of the work for which they are paid. If in the absence of firm case management the threshold test is elevated into a major hurdle mirroring other elements of an equal pay claim, the purpose of equal pay legislation will be thwarted, and the pay disparities will not be investigated. This outcome would be contrary to the object of the equal pay legislation as recognised by Lord Slynn in British Coal, which was to allow comparisons between employees who did not and never could work in the same workplace (see para 24 above). Furthermore, as Lady Hale explained in North at para 35 (set out at para 28 above), the common terms requirement is not to be used as a proxy for other elements in equal pay claims, such as the evaluation of the comparability of the work done by the claimants and the comparators. To use the common terms requirement in this way would permit the fail-safe to triumph over its limited function and substance’.

So will tribunals be able to move on without becoming endless stuck in arguments about the same establishment? Let us hope so. Meanwhile, the writer can already predict the next quagmire. In paragraph 62 of the Judgment, Lady Arden left open the issue of associated employers and the identity of the employer if the comparators were employees of an associated company but were to be assumed to carry out their role at the claimants’ establishment. The joys of that argument, and more argument on Robertson, are yet to come.

[i]    [2021] UKSC 10

[ii]   [2019] ICR 1118; [2019] IRLR 335

[iii]  [2013] ICR 99; [2013[ IRLR 737

[iv]  [2005] ICR 750; [2005] IRLR 363

[v]   [1989] AC 706; [1989] ICR 33’ [199] IRLR 28

[vi]   [1996] ICR 515 [1996] IRLR 399

[vii]  @ 745B

[viii] @ 746G

[ix]   @526F – G

[x]    @ 527A

[xi]   @ 527E

[xii]  @ paras. 33-41

[xiii] @ 746C