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Abu Dhabi, UAEMonday 18 June 2018

UK grocer Tesco walks into a storm over equal pay

Supermarket chain has been presented with claims that law firm Leigh Day says could eventually total as much as £4 billion

The UK supermarket chain is facing a hefty set of claims over unfair pay. Phil Noble/Reuters
The UK supermarket chain is facing a hefty set of claims over unfair pay. Phil Noble/Reuters

As the UK forces companies to disclose the gap between men’s and women’s pay, the country’s biggest private employer is confronted with a huge demand from workers feeling short-changed.

Supermarket chain Tesco has been presented with claims that law firm Leigh Day says could eventually total as much as £4 billion (Dh20.39bn). The firm contends that female shop-floor workers are unfairly paid less than their male counterparts in warehouses and says more than 200,000 workers could be entitled to compensation.

“There really should be no argument that workers in stores, compared to those working in distribution centers, contribute at least equal value to the vast profits made by Tesco,” Leigh Day lawyer Paula Lee said. Tesco said it hadn’t received the claims.

The demands come as the UK implements new rules requiring any company employing more than 250 people to disclose the disparity in pay between men and women by April, according to AP. Tesco is particularly exposed because of its size as well as a recent push to put thousands more staff on its shop floors in a bid to soften its hard-nosed image among UK consumers.

Staff in Tesco’s stores are paid around £8 an hour, while their counterparts in distribution centres may get in excess of £11.50, Leigh Day said. The firm said it has been approached by more than 1,000 people either currently or formerly employed by Tesco.

The grocer previously said that men on average were paid 14 per cent more than women in the year through April 2016. Of Tesco’s lowest paid workers 62 per cent are women, but only 41 per cent of its highest earners are female. A Tesco spokesman said the company “works hard to make sure all our colleagues are paid fairly and equally for the jobs they do.”

Tesco’s shares were down 0.8 per cent at 9:50am in London on Wednesday.

“If the Tesco employees are equally successful then all major retailers, and indeed businesses more generally, could be exposed to a tidal wave of equal pay litigation,” said Crowley Woodford, an employment lawyer at Ashurst.

The publication of the BBC’s highest earners revealed substantial differences between men and women at the top of the organisation, while EasyJet’s new male chief executive took a pay cut to match the salary of his female predecessor.

Leigh Day specialides in human-rights cases that have turned it into a thorn in the side of large companies. Among other things, it represented Nigerian villagers against Royal Dutch Shellover oil spills.

The Tesco case follows similar claims by Leigh Day against two other UK supermarket operators - Walmart’s Asda and Sainsbury. In the Asda case, which more than 15,000 workers have joined, an employment tribunal found that the lower-paid store staff can compare themselves to the distribution-centre workers.

“The difference in pay is probably due to the nature of the work rather than gender, but the Tesco claim could have big repercussions across other retail businesses,” according to Maureen Hinton, director at retail researcher Conlumino.

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For all retail staff, work is already becoming less secure. Amid a shift to online shopping and warehouse automation there was a 3.9 per cent drop in the number of hours worked in the UK retail industry in the fourth quarter, according to the British Retail Consortium.

For the retailers, the threat of a further bump in staffing costs is unwelcome. The likes of Tesco have borne the brunt of recent increases in the UK’s minimum wage, as well as cost increases stemming from the fall in the pound after the country’s vote to leave the European Union.

The Tesco case arises as Britain is to launch a consultation into workplace rights in the face of public and political concern that some in the "gig economy" are being exploited.

Ministers said millions of people will be able to seek a more stable contract, have holiday and sick pay enforced, receive a list of their rights and be given a payslip.

But unions said the plans did not go far enough and accused the government of further delaying a decision on the thorny topic of whether those working for firms such as Uber and food courier Deliveroo deserve more rights.

Many in the gig economy, where people tend to work for multiple firms without fixed contracts, operate on a self-employed basis, entitling them to only basic protections such as health and safety.

Workers in Britain receive the minimum wage, holiday pay and rest breaks and employees are also guaranteed rights such as maternity leave and sick pay.

Firms such as Uber have called for greater clarity in the law but say their average drivers already earn more than the minimum wage and that they enjoy the flexibility of work.

Unions say those practices are exploitative and have taken court action, winning a high-profile case over workers' rights against Uber in 2016 which the taxi app is appealing.

Prime Minister Theresa May is keen to show she is tackling problems faced particularly by younger Britons, who deprived her ruling Conservatives of a majority in a snap election last year by overwhelmingly backing the left-wing Labour Party.

As part of the consultation, which is due to close in May, the government will consider whether new legislation is needed to make it easier to differentiate between employment categories, affecting rights and tax obligations.

It comes after a review by the chief executive of The Royal Society of Arts Matthew Taylor said last year that many Britons working for firms in the gig economy deserved more entitlements.

The Independent Workers Union of Great Britain, which is part of legal action over workers' rights against Uber, said Wednesday's government response to the review did not go far enough.

"More than anything else, it is an exercise in kicking the problem into the long grass," said General Secretary Jason Moyer-Lee.

"What we needed to see was a serious extension of rights to workers and a serious proposal on government enforcement of employment law, not just a consultation on the topic."