The ECJ has ruled that the EU fundamental principle of equal pay has direct effect in respect of both equal work and work of equal value claims. The ruling has paved the way for Tesco retail store employees to proceed with claims comparing their work to distribution centre colleagues.
- This case concerned over 6,000 equal pay claims brought by former and current employees of Tesco store (mainly female) employees who argued that their work was of equal value to Tesco’s distribution centre (mainly male) employees. As a preliminary issue, Tesco argued that the comparison was not permitted, because the claimants worked at different locations to the comparators.
- EU law contains a right to equal pay (Article 157 of the Treaty of the Functioning European Union (TFEU)), and ECJ case law has held that employees at different establishments can compare their pay if their pay is determined by a “single source”. However, it was unclear whether this right to equal pay has direct effect in equal pay claims where the claimants and their comparators perform work of equal value, as opposed to claims based on equal work (i.e., work which is essentially the same) . The tribunal sought a preliminary ruling from the ECJ on this point and the ECJ confirmed that it did have direct effect – equal pay is a fundamental principle of EU law and a distinction between equal work and work of equal value, as contended by Tesco, would compromise the effectiveness of that protection.
- Moreover, the court reiterated the “single source” test and stated that it was evident here that the claimants and their comparators were employed by the same employing entity, so this requirement was satisfied.
- Given that the ECJ considered Tesco to be a “single source”, the effect of this decision is that the UK employment tribunal should now rule that the fact that the store employees work at different establishments is not a bar to the claims. The proceedings should therefore proceed to the next stage; namely, determining whether the claimants’ and comparators’ work is of equal value.
- The recent Asda Supreme Court decision also permitted retail store employees to compare themselves to distribution centre colleagues, but was dealing with arguments under UK law. The combined effect of the Tesco and Asda decisions is that employees in multi-establishment companies should find it easier to proceed to the substantive question of whether their work is of equal value. However, this is still a lengthy process, and employers will still be able to argue that any inequalities of pay are attributable to non-discriminatory material factors.
- Finally, the ECJ had jurisdiction to make this preliminary ruling as the case was referred before the end of the Brexit transition period.
For advice or to discuss what this means for you and your business, please contact your usual Baker McKenzie contact.
Case: K and others v Tesco Stores Ltd, ECJ