Luke Menzies: Tesco equal pay claims – another reminder of your hidden risks

As I speak to more and more businesses about pay equality, I’m finding that most senior executives still don’t appreciate the hidden risks posed by ‘equal value’ claims for equal pay. And indeed that’s the case with quite a few HR directors too.

But what the new Tesco claims remind us is that equal value claims are definitely the aspect we all need to be most focussed on.

£4 billion exposure

You’ve probably heard that the ACAS Early Conciliation process is currently handling claims from a representative sample of female Tesco store-based staff who are claiming equal pay with male workers at Tesco’s distribution centres. It’s essentially the same claim as is continuing against ASDA at the moment. This relatively small group of just under 100 Tesco employees are just the vanguard, and if they win then the floor is open to hundreds of thousands of their female Tesco colleagues to bring similar claims. Apparently the total exposure to Tesco could be up to £4 billion in back-pay (see the Guardian and the BBC for informative articles).

The obvious… and the not-so-obvious

In the many Equal Pay Audits that my colleagues and I have now conducted on businesses and public sector bodies, it has been apparent time and time again that nowadays there is relatively little deliberate, intentional paying of men and women differently for precisely the same work. It still occurs, but it’s getting less and less. Take once step backwards, and look at those in similar but not identical roles, and the picture is worse, but the trend still seems to be going in the right direction. (Having said that, the day on which everyone in the HR team is paid the same as their quite genuine equivalents in the Finance team is still a distant dream for most.)

But at least these types comparisons are very (or fairly) obvious, and you know where to look when you’re assessing risk and potential financial exposure. The big problem is with these ‘equal value’ claims, where the comparisons can come at you out of the blue, never previously on your radar.

‘Equal value’ claims for equal pay have been with us since 1984 but are still little understood. Equal value comparisons can be made between those doing completely different jobs in completely different parts of an organisation. As the ASDA claims reminded us last year, they can even be made between employees working in different group/associated companies (the store staff and the distribution depot staff are employed by separate companies within the ASDA group). It can be very difficult to spot and predict them all unless you are an equal pay expert.

The power of JES

This is, of course, why Job Evaluation Schemes are so helpful and so effective at both preventing ‘equal value’ claims arising in the first place and then providing you with very solid defence if such a claim is bought. As long as you implement your JES properly and of course follow it consistently. And as long as they are modern, fit-for-purpose and don’t contain the in-built sexism that many of the older schemes do, which is to over-value traditionally ‘male’ activities and undervalue traditionally ‘female’ activities when dishing out the pay points. (It is no accident that Birmingham City Council is having to find a spare £1 billion for the back-pay for all those female cleaners, school cooks, etc. who successfully raised equal pay claims by comparing their pay with that of refuse collectors and the like. Their long-standing local authority JES was way out of date and significantly sexist in favour of men.)

Key messages from Tesco

To my mind, the key reminders for us to take from these new Tesco claims and the staggering potential cost that has made exciting headlines are as follows:

  1. Equal Pay Audits. Do them. Do them thoroughly. Across your whole organisation, into every nook and cranny and every subsidiary and associated company. Get the data. Shine the spotlight. Yes, we at Menzies Law would definitely be delighted to carry this audit out for you – although, as they say on the BBC, ‘other products are available’. Whoever does it, get it done, and soon.
  2. Your Board really can’t afford to have their heads in the sand over this. I get the feeling that most (mostly male) senior executives really don’t want to know about these equal value risks. They don’t really understand them and they’re hoping that if they ignore them for long enough, the risk might go away – or that HR might somehow solve any that do arise with your HR magic wand. However, your executives need educating and they need equal pay risks of all types firmly up their on their Risk Register in capital letters.
  3. Group companies and associated organisations in your structure could be the weak link. It’s no good you doing the right thing and having a marvellous, fit-for-purpose Job Evaluation Scheme for your main organisation if it has a coach and horses driven through it because in another group company they haven’t adopted the same scheme and are paying certain people or roles more than you pay at your end

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About Luke Menzies

Luke Menzies, a dual-qualified Barrister and Solicitor and a leading employment lawyer in the South West. Founder and Managing Partner of the award-winning Menzies Law, Luke has an enormous amount of experience and expertise in working with CEOs, HR Directors, Finance Directors and their colleagues to deliver pragmatic, commercial solutions to their employment law and people-related challenges. His extensive experience as a Barrister handling Employment Tribunal and court claims allows him to offer bold and creative advice with a high degree of authority and confidence. He spends much of his time with clients handling the exits of senior executives and high-level strategic issues such as restructuring, pay & reward, trade unions and industrial action.

Luke has appeared as a studio guest on BBC News as an employment law expert and is regularly invited to speak at national and regional conferences such as the CIPD, Association of Colleges, the E-Rewards Annual Conference and the Sheet Plant Association. He also writes articles for leading HR publications and is regularly asked for comments and quotes as a gender pay gap/equal pay expert by publications, which have included national newspapers, such as The Telegraph, The Sun and the Evening Standard.

In 2017 Luke was elected a Fellow of the Royal Society of Arts, Manufactures and Commerce (RSA) for his work in promoting gender equality both within Menzies Law and with clients.

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2 Comments - Write a Comment

  1. Our salary rates are set by reference to market survey data.
    We find that two jobs, at the same level of “complexity” (same JE points) are paid completely different amounts because, say, Finance jobs attract a noticeably higher premium than, say, HR jobs.
    So, what if our Finance team is mostly male and our HR team is mostly female ? – we pay our male finance workers more than our female HR people, not because of their gender, but because of the sector they work in and it’s higher market rates.
    How do we stand there then ?

  2. That’s a very good question, Reg and one that I know employers regularly grapple with.

    My first response is that if your JES is a reliable, modern scheme and its judgement of the roles being of equal value can be treated as being sound, then you are certainly on the back foot and need to act very defensively to protect yourselves against equal pay claims if you are choosing not implement its output but instead to go with a (higher) market rate. An Employment Tribunal is going to take a fair amount of convincing that the JES output is ‘wrong’. And since HR colleagues tend to know more than most about equal pay, the risk of equal pay complaints and Tribunal claims could be said to be quite high here.

    I would recommend a review of the data being fed into the JES: are you confident that all the responsibilities and skills, etc. held by the Finance roles have been taken into account by the JES? Have any of the factors relating to the HR roles been overstated?

    Assuming that no adjustment of the outcome of the JES is going to provide the solution, I would then question how and why the business has decided that these Finance roles definitely attract higher rates of pay in the labour market for Finance staff. You need a decent amount of evidence from reliable sources to prove any argument about market rates, and for each of the roles in question.

    You also need to guard against paying your Finance staff more than your JES suggests they were worth simply because the Finance people negotiated hard (or indeed at all) when hired and/or during pay reviews. Negotiating skills are not, as you may well be aware, a basis for a material factor defence.

    I hope that’s helpful. It’s a very valid question and it puts me in the mood to publish a blog on the subject soon.

    Wishing you all the best with your pay issues.

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