Equal pay claims continue to be made against major employers like Next, Sainsbury’s, and Asda, despite their public declarations of equality and inclusion. What impact has the presence of major group claims on the cause of gender pay equality? Jo Faragher investigates.
The Post Office Scandal was one of the most popular stories of last year. It highlighted the plight a group Post Office subpostmasters who were wrongly accused and sought justice.
This is one of the UK’s most prominent group lawsuits, and it shows the importance of group action in helping people with limited means to access justice. There are still many group actions that do not make it to the TV, and they involve a large number of women.
Birmingham City Council has had a long and impactful case. The authority has received more than PS1billion in compensation since a landmark Equal Pay claim was filed against it in 2012.
It settled in December with unions, resulting in thousands of women receiving payouts for this year. However, the impact has been significant on the council. The council issued a Section 114 notification of bankruptcy for 2023 due to the liabilities from historic equal pay claims. These could be as high as PS760 million.
There have also been a number of complaints against retailers such as Asda Morrisons Sainsbury’s Next. The main focus of these claims is the disparity in pay between male and female workers in distribution and warehouses.
Each group has a different mechanic, but there is one thing in common – they are all brought together by hundreds of women who share a legal representative to seek financial compensation.
Redressing wrongs
What has been the impact of these large-scale, long-drawn-out claims for equal pay?
Stephen Simpson, Brightmine’s principal editor, explains that group equal pay claims can be a way to right wrongs from the past, such as pay disparities which often date back decades, rather than tackle gender equality today. However, HR professionals, DEI specialists and pay experts will always be alert when a high profile group equal pay case is launched, reaches a landmark, or is finally settled.
In Autumn 2024, employers began to ask Brightmine more questions about equal pay after the Employment Tribunal found that Next‘s female retail consultants had performed work of equal worth to their warehouse operatives.
Simpson says: “Large companies take notice of these headlines cases, and the large amounts cited. It was estimated that the case would cost Next as much as PS30m at the time.
This may cause them to take actions that they might not have considered otherwise – we were specifically asked about approaches for salary benchmarking, and how to conduct a equal pay audit.
Brightmine was also asked about job evaluation systems, which evaluate the content of all jobs by referring to their core components. Employers can then identify jobs of equal value and ensure that staff is paid equally.
He explains that “of course, the employer’s main concern is to reduce the risk of expensive litigation.” Equal pay audits and job assessment schemes are important steps towards improving gender equality for employers in the long term.
Strength in numbers
Emma Birch is a partner at KP Law. She has represented women who have filed group lawsuits against Tesco and Morrisons. Sainsbury’s, Asda and Sainsbury’s are also among the companies she has sued.
Justine Woolf Innecto: “The biggest thing that organisations can do is to examine whether their pay practices have been justified”
“It is of little use for people to have rights if they are unable to enforce them.” She says that pay differentials could be life-changing money for some, or even the difference between paying off a large bill and taking a vacation. The legal process is complex and time-consuming. How would an individual manage to take on a company like Tesco?
The fact that the High Court does not have a cost recovery system for successful claims is another consideration for claimants.
Birch says that this applies pressure to the claimant to expedite the process and deters unworthy claimants. “The only way to reinforce their rights is for someone else to pay the bill and do the heavy-lifting, so there can be strength in number.”
There is nothing to lose
Justine Woolf is the consultant lead at Innecto. She says, “The benefit of collective action comes from giving people confidence to form groups even if they don’t have the financial resources. They may also not understand how the law operates or their rights.”
They feel reassured and empathized with, and are more confident to pursue their case. We can’t ignore the commercial aspect of law firms who encourage people to take part in these actions by offering a “no-win, no fee” basis.
Birch counters by saying that “75% is better than nothing” in terms of the commercial rewards that group litigation firms receive when building these cases. They also say that they are a force for positive change.
In such cases, the lawyer is responsible for determining which roles are of equal importance to the tribunal. This is something that would drive most claimants crazy. She explains that this could be as simple as how many times someone must drop something into a bin and how far it is.
Take time
Simpson, from Brightmine, agrees that while group claims can improve access to justice there are also definite downsides.
Some group claims in the UK have been pending for over a decade. It is especially true when employers are bringing up technical challenges whenever they can. That’s why the Equal Pay case against Asda took so long.
He says the settlement announced by Birmingham City Council and unions in December is an example of a “quick settlement” that only took four years. Equal pay claims are unlikely to go away anytime soon in the retail industry, and other sectors that have historically had inequalities in male and female roles could join them.
Equal pay can help close the gender pay gap.
Simpson predicts that “while retail is the current battleground, high profile claims in this sector may encourage workers and their unions to consider equal-pay claims” in other sectors. According to the gender pay gap report figures, education, finance and insurance and construction are the three sectors with the most imbalance.
Professor Giacomo Vagni of the Department of Sociology at the University of Essex believes that group litigation is a key factor in raising the awareness of pay inequality.
“However the latest equal pay case in Birmingham was not the first that the city council had to deal with, showing that litigation has a limited impact.” He adds that other strategies such as collective bargaining and pay transparency should be used in conjunction with litigation.
The public sector has a better track record in litigation than the private sector. “Private companies will often change job titles in order to hide inequality, making it more difficult to prove discrimination.”
Mitigating risk
Woolf says that the practical impact of group action has been an increased demand for pay audits. Employers are also relying less and less on market data when setting pay rates, as claims have proven them to be unreliable.
She explains that there was an implicit assumption that you could use market data to defend yourself if it showed a difference in pay between men and women. This is no longer true. “Instead, organizations are thinking more widely about whether they pay their employees fairly. There’s also a general movement towards transparency or putting in place levelling frameworks.”
However, employers can take steps to reduce their risk of a claim for equal pay. Woolf says: “The most important thing that organisations can do, is to examine whether their pay practices have a justifiable basis. It doesn’t matter if there is a pay framework in place.
Look at your recruitment, promotions and performance-related pay. What roles are comparable, and do you pay them differently? Why? “Don’t assume that your pay structures will work for you because they have worked for years.”
Equal pay for equal work
The Employment Rights Bill, which is due to be introduced in the near future, includes provisions that will allow the government to introduce legislation to require larger employers to publish and develop an “equality plan” which would detail how they address gender pay gaps.
Simpson says: “In principle, this is great, but the problem will be in implementing it and if employers actually do anything to improve gender pay disparities.
The current bill does not require employers to implement an action plan. The employer will be responsible for implementing the plan.
If the legal framework does not influence employers to deal with pay inequalities, perhaps a positive and proactive approach will have a greater impact.
Woolf argues that it is not only important to protect but also improve your reputation. Woolf argues that Aldi, Lidl, and other retailers have increased their willingness to pay in the retail sector, which is pushing others to raise their game and grow their market share.
Warning Shot
Deeba syed, the head of research, policy and advocacy for the Fawcett Society argues that large group claims should be used as a “warning shot” to all employers in order to combat pay inequality.
She says that it’s not surprising to see group equal-pay claims in sectors such as retail and public sector where women are overrepresented, particularly in roles with lower pay. The gender pay gap is a result of many factors, including that women are more likely to take on unpaid caregiving responsibilities while men tend to dominate higher-paying positions.
Fawcett Society research found that 60% women don’t even know how much their male co-workers earn or believe they are paid less. Syed says that employers can get away with discrimination in pay because they are reluctant to talk about it.
“We must see employers examine their pay structures and address their gender pay gap. should not ask potential employees about salary history. These things are not expensive, but they can help close the gender pay gap in the UK and eliminate unequal pay.
Dr Vagni is concerned that the only way to make progress will be through systemic changes: “Women are over-represented in jobs which are precarious, more susceptible to casualisation, and historically have been undervalued leading to lower wages.
“Equal Pay Cases have helped expose the dual standard of unequal compensation, especially in fields dominated by women, such as care and domestic work. This is compared with male-dominated industries, like industrial work and construction. The fact that these cases were won is a social recognition of how women’s work has been undervalued. It may also help to gradually change attitudes and societal norms over time.
We’re unlikely to see group pay claims disappear anytime soon, given the depth of the issue. Groups are making noises about inequality and employers cannot ignore this.
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