Tesco equal pay dispute: Companies encouraged to eliminate unconscious biases

UK supermarket staff fallout could spark repercussions for other companies and sectors

The Tesco equal pay dispute, which hit the headlines last week after 6,000 employees took the supermarket to an employment tribunal, should encourage companies to look inwardly at potential “unconscious or systemic biases” and how they might be prevented.

Last week, a contingent of former and current employees won the support of the Luxembourg-based Court of Justice (CJEU) as they argued the company’s shop workers – mostly women – had not received equal pay for equal work compared with its distribution workers – mostly men – since February 2018, in breach of EU and UK laws.

See also: – How index investors can push for equality

As they held similar job titles, the shop staff argued they should be seen as a single entity in terms of employment conditions.

At the Watford tribunal, Reuters reported that Tesco argued an EU law defining equal pay for equal work, or work of equal value, was not directly applicable in this case, and said the jobs in its stores and distribution centres were different and hence the different pay.

But in response guidance supplied to the UK court by CJEU judges, it was said: “The principle, laid down by EU law, of equal pay for male and female workers can be relied upon directly, in respect both of ‘equal work’ and of ‘work of equal value’, in proceedings between individuals.”

Although the decision is far from final, the move by CJEU could lead to repercussions across many companies in and outside of the retail sector.

Amy Wilson, engager, EOS at Federated Hermes, said this should prompt further consideration and action from company managements.

“In our engagement with companies, we advocate for diverse and inclusive workforces and equality of pay, reward and opportunity are key to that,” she said.

“We know that some of the barriers to this are less formal or even unconscious, such as certain roles and professions which are traditionally female-dominated being less valued.

“This issue is not limited to any one organisation or sector, and this case highlights the need for companies to think carefully about any unconscious or systemic biases in their organisations and how these might be preventing them from achieving real diversity across all functions and levels of seniority, and from realising the benefits of this.”

Patrick Thomas, head of ESG investing at Canaccord Genuity Wealth Management and editorial panellist for ESG Clarity also said the court’s guidance is a “good portent for the social expectations of companies post pandemic”.

“The frame for how a corporation assesses how much ‘value’ an employee adds has changed and it’s no longer ‘we think these roles are different so will pay people differently’. It’s ‘would there be a perception of bias given the employee gender distribution within these roles if we elected to pay them different amounts’.

“Companies have proven for decades that a regulatory or legal stick is more effective than a carrot.”

The Watford tribunal will now have to take the CJEU ruling into account when it decides on the case, but Charles Allen, retail analyst at Bloomberg Intelligence, said there are still several steps to go before any decision is reached.

“As far as I understand it this means there is a case to be considered, not that the ECJ believes that the work in distribution centres and shops is of equal value/worth.

“Distribution centres are typically located in less convenient places than supermarkets/shops and are often surrounded by other similar warehouses, so wage comparisons may have been made with employees in such warehouses, even if those warehouses were not in retail.

“On job titles, etc, it may depend on what the outcome of the case is. However, it is not apparent that shopworkers want the same career path as those in distribution centres.”


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...