Tesco Faces Billions in Equal Pay Claims
60,000 Tesco store assistants are claiming that they are paid up to £5.50 less than Tesco warehouse employees despite performing work of equal value.
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60,000 Tesco store assistants are claiming that they are paid up to £5.50 less than Tesco warehouse employees despite performing work of equal value. Tesco is defending itself against this claim on the basis that equal pay between these two categories of worker would ‘disregard economic reality. ’
The claim is being represented by lawyers at Leigh Day and also involves claims for back-pay (previous pay that these workers have received). These lawyers estimate that the total claims could reach £4 billion, and Tesco has been summoned to an employment tribunal to explain why these pay differences are unrelated to gender (as the warehouse workers were nearly 90% men).
This case is part of a wave of equal pay claims across major UK retailers including Asda, Morrisons and Next, with workers scoring successive legal victories. And Morrisons is facing a parallel claim to Tesco over equal pay in Leeds at the moment, with an employment tribunal hearing set to begin this week.
Retailers argue that warehouse work commands higher wages because labour markets demand it, as these jobs are physically demanding, involve unusual shift patterns, and face competition from other logistics companies like Amazon paying a premium to attract these workers. Store assistants by contrast face less competitive pressure as the available labour pool for these roles is larger, and these roles typically occupy usual daytime hours.
What does this wave of claims mean for retail?
- The Equality Act 2010 requires equal pay for work of equal value unless employers can prove pay differences stem from genuine factors unrelated to gender
- Unions and claimant law firms have established successful litigation models for these sort of cases, encouraging workers to adopt more of these claims
- The threat of multi-billion pound liabilities might force retailers towards pre-emptive settlement or gradual pay equalisation
How to use this in applications
Equal pay litigation generates substantial legal work for the employment teams at law firms. As Tesco faces a five week hearing defending this £4 billion in potential liability, employment teams will have to prepare extensive witness evidence and draft legal submissions arguing a defense under the Equality Act 2010.
Claimant-side law firms like Leigh Day have to manage mass litigation involving tens of thousands of workers, requiring sophisticated case management systems and group litigation orders to coordinate on common issues.
If Tesco is found to owe significant amounts of back-pay, then the tax teams at law firms will have to help determine whether and how this pay is subject to income tax and National Insurance. They would have to advise on payment structures to minimise tax impact and also manage further disputes where workers disagree with pay calculations.
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