Grocers Face $11 Billion in Equal Pay Claims After Asda Ruling

The U.K.’s biggest retailers face a potential 8 billion-pound ($11 billion) legal fight after Asda Group Ltd. lost a top court ruling in an ongoing equal pay dispute.

The U.K. Supreme Court on Friday ruled that the salaries earned by women who work in grocery stores could be compared to men who predominantly work in warehouses. The case will return to an employment tribunal, where a judge will determine whether the roles are of equal value and the wage discrepancy was a result of discrimination.

It’s the largest equal pay claim in the private sector and could lead to a hefty bill for the supermarket, as well as support litigation against its competitors Tesco Plc and J Sainsbury Plc as well as retailers like Next Plc. Leigh Day, the law firm that filed the class-action suits, said if the companies lose the claims, they could face a collective 8 billion pounds in payments to employees.

“It would be difficult to underestimate the significance of this judgment which will send shock waves far beyond Asda,” said employment lawyer Anne Pritam, who wasn’t involved in the case.

40,000 Women

Over 40,000 women joined the Asda suit and could each be eligible for around 10,000 pounds ($13,730) in back-pay, their lawyers have said. It’s not clear whether it will be its old owner Walmart Inc. or its new owners, entrepreneurs Zuber and Mohsin Issa, who will have to pick up the tab.

It will likely take several more years for the overall case to be determined.

Asda said that its workers get equal pay whether they are men or women, but it’s not fair to compare workers in the stores to the distribution staff.

“Retail and distribution are very different sectors with their own distinct skill sets and pay rates,” the company said in a statement.

Judge Mary Arden said this was a “very substantial case for Asda.” In 2016, when the case was before the employment tribunal, the company had around 613 retail stores and 133,000 hourly paid retail employees.

The case is “important because otherwise an employer could avoid equal pay claims by allocating certain groups of employees to separate sites so that they can have different terms even where this is discriminatory,” she said in Friday’s ruling.

Outdated Views

The workers had argued that the difference in pay was a result of “stereotypical assumptions” about women’s work being less valuable. In a court filing, they pointed out that in 2011, Asda’s vice president of labor relations said that store workers were mostly “part-time females who are working at Asda for a secondary income to support the main household bread winner.”

Lauren Lougheed, the lawyer who led the shop-workers case, said they’ve “cleared such a big hurdle in their fight for equal pay.”

“It’s our hope that Asda will now stop dragging its heels and pay their staff what they are worth,” she said.

“While tens of thousands of shop floor workers will be celebrating today, major retailers will be anxious that the equal pay battle takes a step closer to blowing a multi-billion pound hole in their Covid-depleted coffers,” Pritam said.

©2021 Bloomberg L.P.

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