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Equal pay: CJEU delivers judgment in Tesco litigation

  • United Kingdom
  • Employment law

03-06-2021

The application of EU law (including case law) has been behind some of the most significant changes in UK equal pay law.  However, determining which legal rights individuals have under EU law that they can directly rely on in domestic proceedings is far from straightforward given the plethora of EU and domestic provisions which apply.

In one of the last decisions by the CJEU in relation to UK employment law, the CJEU has determined that the provisions of EU law can be relied upon directly, in respect of both ‘equal work’ and ‘work of equal value’, in proceedings between individuals.

EU law takes a less restrictive view than UK law with regard to comparators.  EU law does not require claimants and their chosen comparators to be in common employment in order for an equal pay claim to proceed, rather it allows claims to proceed where men and women are employed in ‘the same establishment or service’ if the pay disparity is attributable to a ‘single source’ – i.e. where one body can rectify any inequality.

As part of the supermarket equal pay litigation, the female Claimants working primarily in Tesco supermarkets are arguing that their work and that of the male workers employed by Tesco in their distribution centres are of equal value. 

As part of establishing this comparison, the Claimants argued that they were entitled to compare their respective work under Article 157 of the Treaty of the Functioning of the European Union (TFEU), even though their work is carried out in different establishments.  The Claimants argued that, in accordance with that Article, there is a ‘single source’, namely Tesco Stores, responsible for the terms and conditions of employment of both groups of workers.   

Tesco had argued that under UK law it wasn’t clear whether the women in their stores could rely upon men in the distribution centres as their comparators for equal pay claims as they were based at different establishments.  It also argued that Article 157 TFEU was not directly effective in the context of claims based on work of equal value (which involves a specific process involving the use of independent experts – wholly distinct from like work/work rated as equivalent claims) and therefore the Claimants could not rely on that provision.  Finally, Tesco also disputed that it could as an entity be classified as a ‘single source’ given that the same people are not responsible for the terms and conditions of employment in both stores and distribution centres.

As the CJEU has determined that Article 157 TFEU has direct effect in equal value claims, this means that if it can be demonstrated that there is a single source able to control terms and conditions for employees across a business, for example an overarching holding company, employees can compare themselves to any other employee in the organisation, of a different gender, notwithstanding that they are employed at different establishments. The existence of a single source will be fact sensitive in any particular case.

Given the referral was made by the Tribunal in the Tesco case pre-Brexit on whether EU law applies to Tesco, this is a binding precedent in this particular case. It has yet to be established whether the decision has binding effect on the UK government and other equal pay cases which were not subject to the specific referral.  

Finally it’s important to note that this judgment only concerns whether the Claimants are entitled to make this comparison as a threshold test to progressing their equal pay claim in the Tribunal.  It remains to be established whether the Claimants actually perform work of equal value with their comparators and the extent to which Tesco may have legitimate defences to any pay differentials (i.e. a non-gender material factor justifying the pay differential).  Given the remaining issues which are yet to be determined in the retail equal pay claims, it may be many years before this litigation is concluded.