Asda Stores Ltd v Brierley and Others
Jurisdiction | England & Wales |
Judge | Lord Justice Underhill,Lord Sales,Lord Justice Peter Jackson |
Judgment Date | 31 January 2019 |
Neutral Citation | [2019] EWCA Civ 44 |
Docket Number | Case No: A2/2017/2600 |
Court | Court of Appeal (Civil Division) |
Date | 31 January 2019 |
[2019] EWCA Civ 44
Lord Justice Underhill
(Vice-President of the Court of Appeal (Civil Division))
Lord Sales
and
Lord Justice Peter Jackson
Case No: A2/2017/2600
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EMPLOYMENT APPEAL TRIBUNAL
KERR J
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Christopher Jeans QC and Mr Patrick Halliday (instructed by Gibson Dunn & Crutcher LLP) for the Appellant
Mr Andrew Short QC, Ms Naomi Cunningham and Ms Keira Gore (instructed by Leigh Day Solicitors) for the Respondents
Hearing date: 10–12 October 2018
Approved Judgment
INTRODUCTION
About 30,000 claimants, mostly women, working in Asda supermarkets have brought equal pay claims against their employer, Asda Stores Ltd, which is the Appellant before us, on the basis of comparisons with the pay of male employees employed at depots as part of Asda's distribution operation (“the comparators”). The claims are primarily brought under the Equality Act 2010, but if the claims are well-founded some of the Claimants would be entitled to arrears going back before that Act came into force, and their claims would in respect of that period be governed by the Equal Pay Act 1970. The Claimants also rely, so far as necessary, on the direct effect of EU law, and more specifically of article 157 of the Treaty on the Functioning of the European Union (“TFEU”) and its predecessors.
Asda contends that the Claimants are not entitled to compare themselves for equal pay purposes with employees working in its distribution operation. A preliminary hearing to determine that question took place in the Employment Tribunal in Manchester before Employment Judge Ryan over six days in June 2016. By a thorough and well-organised Judgment and Reasons sent to the parties on 14 October 2016 he decided the issue in favour of the Claimants. His decision was upheld by Kerr J in the Employment Appeal Tribunal by a judgment handed down on 31 August 2017. This is Asda's appeal against that decision.
Asda was represented before us by Mr Christopher Jeans QC and Mr Patrick Halliday, both of whom appeared in both the ET and the EAT, though in the ET they were led by Lord Falconer of Thoroton. The Claimants were represented by Mr Andrew Short QC, leading Ms Naomi Cunningham and Ms Keira Gore: all three also appeared in both the ET and the EAT.
THE FACTS IN OUTLINE
I need not set out the facts in detail at this stage. I will have to return to some points in the course of my discussion of the issues.
Asda had at the date of the ET hearing 630 stores, in which some 133,000 employees worked. Its distribution operation comprised 24 distribution centres/depots employing 11,600 employees. In its early years the operation of its depots was mostly outsourced, but from 2003 they were all in-house and the workforce was employed by Asda.
The ET set out at para. 27 of its Reasons, and appears to have accepted, the evidence of Asda's Distribution Director, Mr Stansfield, that:
“ASDA's distribution and retail sectors are fundamentally different. They have evolved differently over time; operate in separate industries; have different objectives; are located in markedly different physical environments; demand different skill-sets; are subject to varied regulation and, most importantly, have distinctly different functions. Asda is essentially a retailer; its stores are its profit-making centres. The primary function of distribution is to act as an in-house provider of logistics services to ASDA's retail stores: it is predominantly a cost centre, rather than a profit-making operation, and is not consumer-facing.”
None of the depots is located on the same site as any of the stores.
The ET found at para. 29 of its Reasons that
“The terms and conditions of the employees depend on the type of establishment at which they work. Retail employees are employed on Retail terms. Distribution employees are employed on Distribution terms. Those terms are set by reference to different processes.”
As regards retail employees, no trade union is recognised for collective bargaining purposes. All employees are on the same package of terms, wherever they work. Pay is set annually as a result of various internal processes and is simply “imposed”.
As regards distribution employees, until 2010 there was considerable variation from site to site as to the terms and conditions applying, partly reflecting the fact that several centres had originally been outsourced to different third parties. But in May 2012 Asda concluded a recognition agreement with the GMB covering all employees at all of its distribution centres (subject to three immaterial exceptions). The agreement prescribes “model terms and conditions” for the employees covered (subject, again, to some immaterial exceptions) but pay rates are negotiated separately for each centre and in consequence display some variation from depot to depot.
Asda is a subsidiary of the US company Wal-Mart Inc., and its principal decisions as regards pay have to be approved by Wal-Mart.
The Claimants assert that the terms and conditions of Asda employees in Distribution doing work of equal value are superior to theirs in various respects, including principally hourly rates of pay, contractual allowances or bonuses and various aspects of working hours. The details are immaterial for our purposes.
THE BACKGROUND LAW
THE DOMESTIC LEGISLATION
When the 1970 Act first came into force, which was on 29 December 1975, the right to equal pay was accorded by section 1 (2) in two cases – (a) where a woman was employed on “like work” with a man “in the same employment” and (b) where she was employed on work “rated as equivalent” with that of a man in the same employment. With effect from 1 January 1984, as a result of a decision of the ECJ in Commission v UK (Case 61/81), [1982] ICR 578, a third case was added – (c) where a woman was employed on work “of equal value” with that of a man in the same employment.
The phrase “in the same employment”, which is common to all three cases, was defined in section 1 (6) of the 1970 Act as follows:
“… [F]or purposes of this section … 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.”
Section 1 (3) of the 1970 Act afforded an employer a defence where the differential which is the subject of the claim is shown to be “due to a material factor which is not the difference of sex”.
The 2010 Act reproduces essentially the same scheme as the 1970 Act but a different drafting technique is adopted. Section 65 (1) provides for the same three grounds of comparison as under section 1 (2), but the comparator is defined simply as “B” rather than “a man in the same employment”. The scope of permitted comparisons is prescribed, so far as relevant for our purposes, by section 79 (2)-(4), which reads:
“(2) If A is employed, B is a comparator if subsection ( 3) or (4) applies.
(3) This subsection applies if —
(a) B is employed by A's employer or by an associate of A's employer, and
(b) A and B work at the same establishment.
(4) This subsection applies if —
(a) B is employed by A's employer or 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).”
Section 80 (2) (a) provides (so far as material for our purposes) that “[t]he terms of a person's work are … the terms of the person's employment that are in the person's contract of employment”. The equivalent to section 1 (3) of the 1970 Act, albeit differently worded, is at section 69.
It will be observed that although the elements of the relevant parts of section 1 (6) of the 1970 Act are mostly reproduced in substantially identical terms in section 79 (2)-(4) of the 2010 Act, the parenthesis in sub-section (4) (c) uses the phrase “as between A and B” rather than “for employees of the relevant classes”. I shall have to consider later whether this makes a substantive change in the relevant law.
THE EU LEGISLATION
Article 119 of the Treaty of Rome began:
“Each member state shall during the first stage ensure and subsequently maintain the application of the principle that men and women should receive equal pay for equal work.”
There are two further short paragraphs by way of amplification but they are not material for our purposes.
In 1975 the Council of Ministers adopted Council Directive 75/117/EEC. This defined “the principle of equal pay for men and women outlined in Article 119 of the Treaty” as (by article 1):
“for the same work or for work to which equal value is attributed, the elimination of all discrimination on grounds of sex with regard to all aspects and conditions of remuneration”.
Article 2 required member states to introduce domestic legislation whereby employees could enforce the principle of equal pay. In Worringham v Lloyds Bank Ltd (case 69/80) [1981] ICR 558 the ECJ said, at para. 21 of its judgment (p. 589E):
“Although article 1 of the directive explains that the concept of ‘same work’ contained in the first paragraph of article 119 of the Treaty includes cases of ‘work to which equal value is attributed’, it in no way affects the concept of ‘pay’ contained in the second paragraph of article 119 but refers by implication to that concept.”
The necessary implication of that is that the phrase “equal pay for equal work” in article 119 covers “work to which equal value is attributed”.
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