Employment News: equal pay, holiday pay, discrimination

Hogan Lovells

Cashiered – supermarket staff succeed in Supreme Court

To bring an equal pay claim, an employee has to point to a comparator of the opposite sex doing like work, work rated as equivalent or work of equal value. If the employee wants to rely on a comparator who is employed at a different location, they also need to show that the comparator is employed on “common terms”. As the Equality Act does not define “common terms”, tribunals and courts have needed to decide what the phrase means. The Supreme Court decision in Asda Stores Ltd v Brierley makes it clear that the requirement is not necessarily difficult to meet and does not require tribunals to compare the terms of the employee and their comparator to see if they are broadly similar.

Asda’s retail employees were based in stores and predominantly female. They brought equal pay claims, arguing that they were paid less than male employees working in distribution depots. Asda argued as a preliminary issue that the distribution employees were not proper comparators. It pointed out that the two groups of employees were employed at different locations and had different terms and conditions of employment. As such they were not employed on “common terms”. That argument failed in the tribunal, EAT and Court of Appeal and Asda appealed to the Supreme Court.

The Supreme Court rejected the appeal. The proper question is whether the comparators’ terms are broadly similar as between the establishment where they work and the establishment where the claimants work. In simple terms, would the comparator be employed to perform their existing job on broadly similar terms even if they worked at the claimants’ place of work? If there are no employees of the comparators’ group working at the claimants’ establishment and it is not clear on what terms they would be employed, the Court has to consider whether in principle the comparators would have been employed on broadly similar terms. It does not matter that in practice it would be very unlikely or impossible for them to work there.

The employment tribunal had considered what the position would have been if the distribution employees had been employed to perform distribution roles at the retail sites. It found that they would still have been employed on terms that were substantially the same as those that applied at the distribution depots. They would not have been employed on retail terms. That meant that they were employed on “common terms” and were appropriate comparators. The function of the common terms requirement is to prevent an equal pay claim where pay differences are based on geographical factors. It is not meant to be a significant barrier to claims.

Now that the preliminary issue is resolved, the claim returns to the employment tribunal to consider whether the distribution employees are performing work of equal value and whether there is a non-discriminatory explanation for the difference in pay between the two groups.

Staunching the flow – claim for holiday pay out of time

According to the CJEU in King v Sash Window Workshop, a worker who has not taken annual leave because they would not be paid for it is entitled to carry over a right to payment until the end of their employment. The question for the EAT in Smith v Pimlico Plumbers Ltd was whether a similar principle applied where a worker had taken holiday but not been paid for it.

Mr Smith worked for Pimlico Plumbers from 2005 to 2011. He was not paid for any periods of leave because Pimlico claimed he was self-employed. (The Supreme Court eventually decided that he was a worker.) He nonetheless took periods of leave. When his engagement ended, he brought a claim for unpaid holiday pay covering the full period of his engagement. The tribunal rejected his claim because it was out of time. He had not brought the claim within three months of the date on which he should have been paid for leave as required under the Working Time Regulations and the Employment Rights Act 1996.

The EAT upheld the tribunal’s decision. The reasoning in King did not extend to a situation in which a worker had in fact taken leave despite knowing that they would not be paid for it. A worker in Mr Smith’s position, who had taken leave, was not precluded from bringing a claim for pay. If the CJEU had intended to create an additional carry-over right in relation to leave that is taken but unpaid it would have said so expressly.

The EAT’s decision was supported by the fact that:

  • The time limits in the Working Time Regulations would otherwise be rendered ineffective – workers could accumulate a right to payment for leave over a number of years without any regard to time limits;
  • There would be an inconsistency of approach in relation to time limits between cases of unpaid leave and leave that was partly paid, which would be unsatisfactory; and
  • The claimant’s argument created a new right for payment upon termination that goes beyond that envisaged by the Working Time Directive.

The tribunal was therefore correct to find that the normal time limits applied and that Mr Smith’s claims for holiday pay were out of time.

Apples and pears – adoption leave and shared parental leave not comparable

The Court of Appeal decided that a man on shared parental leave could not rely on a woman on maternity leave as a comparator in Capita Customer Management Ltd v Ali. The EAT has now considered in Price v Powys County Council whether a man on shared parental leave can compare his treatment with that of a woman on adoption leave for the purposes of a sex discrimination claim and concluded that he cannot.

Mr Price complained that his employer’s policy on shared parental leave was direct sex discrimination. While a woman on maternity leave or a parent of either sex on adoption leave would receive an element of enhanced pay, a parent on shared parental leave only received statutory pay. The tribunal rejected his complaint because neither a woman on maternity leave nor a parent on adoption leave was an appropriate comparator. The position of a woman on adoption leave was materially different from that of a man on shared parental leave. The appropriate comparator was a woman on shared parental leave whose partner had taken adoption leave, who would have been treated in the same way as Mr Price.

The EAT agreed. The claimant’s proposition that the predominant purpose of adoption leave is to facilitate childcare was not accepted. A child’s welfare lies at the heart of adoption law and the purpose of adoption leave included forming a parental bond, becoming a family and taking steps to prepare and maintain an appropriate and safe environment for an adopted child, who might be older and more independent than an infant. Adoption leave can start before a child’s placement, which indicates that leave is not simply about childcare. Although parents can choose who will take adoption leave, that is a different choice from the one made by parents accessing shared parental leave.

Those factors mean that a person taking shared parental leave is not in a directly comparable position to a person on adoption leave. There are material differences between the two types of leave and the tribunal was correct in its conclusion.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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