Tesco is one of the latest supermarket retailers to face equal pay claims from female staff claiming that their work is of equal value to that of higher-paid male colleagues. Over 200,000 staff could be affected which would give rise to a potential liability of over £4 billion. The potential claim is based on the allegation that Tesco pays female in-store staff £8 per hour, whereas male staff in its distribution centres earn up to £11 per hour.
Jobs do not have to be the same or even in the same department in order for an equal pay claim to arise. Claims can be brought on the basis that completely different jobs are of equal value to the organisation, unless there is a ‘material factor’ which explains the difference (such as seniority, geographical reasons, skills shortages and so on).
Take, for example, a council which pays female cleaners less than bin men. The jobs involve different day-to-day duties but both are unskilled jobs involving physical labour. Crucially, both are of equal value to a council providing public services and, therefore, should be paid the same. In the potential case against Tesco, employees allege that comparable profits in distribution centres and stores demonstrate that jobs are of equal value to the retail giant.
Equal value cases involving groups of different workers can be hard to spot and can take employers by surprise. A job evaluation and pay grading exercise can help arm employers against the unexpected, allowing businesses to gauge what value each role brings to the organisation and thus help unearth pay disparities and potential equal value claims.
The process can bring a double whammy of positive results for employers. Firstly, pay scales underpinned by a sound job evaluation process can provide an absolute defence to an equal value claim, particularly when carried out by an independent expert. Secondly, numerous studies indicate that pay transparency increases job satisfaction and employee retention rates.
In a market where pay inequality is a hotter topic than at any time since the 1970s, moving towards pay transparency can only be a good thing for employers and employees alike.
Donald MacKinnon is director of legal services at Law At Work