What does the European Court’s Tesco ruling mean?

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The European Court win for the Tesco workers was significant, but there is still a long road ahead, finds Adam McCulloch.

Last week’s (3 June) landmark ruling by the Court of Justice of the European Union (CJEU) in favour of Tesco shop-floor workers, followed the judgment in March this year in favour of Asda shop-floor workers and could result in £2.5bn in backdated pay claims.

The court ruled that Tesco’s lower pay rates for their mostly female shop staff relative to their mostly male colleagues in depots breached EU legislation and the principle of equal pay.

The workers’ case hinged on the “single source” principle, whereby it could be shown that the inequality in pay was attributable to a single source, in this case the board of Tesco. The ruling dismissed the retail giant’s argument that the EU principle defining equal pay for equal work or work of equal value was not applicable in this case. It also rejected its argument that the roles required “different skills and demands”.

According to Camilla Beamish, legal director at law firm Cripps Pemberton Greenish, the judgment leaves “little uncertainty and demonstrates the CJEU’s firm hand with regard to equal pay claims”.

She adds that the ramifications across the retail sector are clear: “Despite Tesco remaining adamant that they remunerate their staff fairly, the impact of this ruling will now make it even harder for businesses to justify paying their female and male staff differing rates for work of equal value.

“In addition, given the overwhelmingly high profile of both Asda and Tesco, it is hoped that these recent judgments will set a precedent for other private sector businesses and encourage them to urgently review their remuneration structures and equality policies.”

“This decision is final and binding and these principles will therefore be applied to any future equal pay cases in the UK,” says Beamish.

Many will question the CJEU’s ruling on the basis that, since Brexit, the court no longer has jurisdiction over UK law. National courts of EU members routinely refer questions on EU law to the European court.

In this case, however, the court’s decision does have implications for UK employers. This is because the CJEU was asked whether workers could compare salaries with others in different parts of the business in 2019, before the UK’s formal exit from the EU.

Emily Fernando, senior associate at Harcus Sinclair, confirms that the ruling is fully relevant even five months after the UK’s departure from the EU: “UK courts can’t refer questions about EU law any more. But we asked this question pre-Brexit. The answer just happens to have come post-Brexit. The decision is relevant because it’s about what is now effectively a UK law.”

Beamish adds: “The ECJ’s ruling in the recent Tesco equal pay case is likely to be one of the last major decisions by the EU in relation to UK employment law before changes resulting from Brexit take hold.”

This decision is final and binding and these principles will therefore be applied to any future equal pay cases in the UK” – Camilla Beamish, legal director, Cripps Pemberton Greenish

According to Leigh Day, which represents about 50,000 shop workers in various equal pay cases against their employers, under EU law a woman can compare her role to that of a man working in a different establishment if a “single source” has the power to correct the difference in pay.

The CJEU said: “Where such pay conditions can be attributed to a single source, the work and the pay of those workers can be compared, even if they work in different establishments.”

Despite the widespread media headlines hailing “victory” for the Tesco shop workers, Beamish advises that expectations of change in the short term should be modest.

She says: “Despite the clarity brought about by the CJEU’s ruling on these particular points, the claims against Tesco are extremely complex and there are many more hurdles for the 6,000 claimants to overcome. The claims are likely to take many years to reach a final conclusion. Tesco remain adamant that they remunerate their staff fairly and have confirmed that they will continue to defend the claim in the national courts.”

Responding to the court’s decision last week, a Tesco spokesperson said: “These roles require different skills and demands which lead to variations in pay – but this has absolutely nothing to do with gender,” a spokesperson for Tesco said. “We continue to strongly defend these claims.”

“We reward our colleagues fairly for the jobs they do and work hard to ensure that the pay and benefits we offer are fair, competitive and sustainable. These claims are extremely complex and will take many years to reach a conclusion.”

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