UK supermarket giant Tesco faces £4bn worth of equal pay claims

UK supermarket chain Tesco faces its first equal pay claims that could add an extra 4 billion to its wage bill. The action has been brought by law firm Leigh Day, which said it had started submitting claims on behalf of its clients through ACAS, which is the first stage in the Employment Tribunal process.

Leigh Day said they have already been approached by over 1000 employees and ex-employees of Tesco. The law firm is arguing that Tesco shop workers, who are predominately female, do work that is equal in value to the work carried out by staff, who are mostly male, in the company’s distribution centres.  This follows a ruling by the Employment Tribunal in June 2016 that found that lower paid female Asda workers, also represented by Leigh Day, could compare themselves to higher paid men who work in Asda’s distribution centres. Asda is a subsidiary of US supermarket giant, Walmart.

Tesco equal pay

Tesco faces thousands of equal pay claims

Tesco employees working in its distribution centres can earn in excess of £11.00 an hour whilst the most common grade for store staff sees them receive around £8.00 per hour, Leigh Day said. This disparity could see a full-time distribution worker on the same hours earning over £100 a week, or £5000 a year more than female based store staff. According to Leigh Day, the underpayment of workers could apply to in excess of 200,000 Tesco employees, with estimated pay shortfalls that could reach £20,000 and the final bill for Tesco could be as high as £4 billion.

Paula Lee, the lawyer from the employment team at Leigh Day who is representing the Tesco women, said: “We believe an inherent bias has allowed store workers to be underpaid for many years. In terms of equal worth to the company there really should be no argument that workers in stores, compared to those working in distribution centres, contribute at least equal value to the vast profits made by Tesco which last year had group sales of £49.9bn.”

She added: “According to the latest annual report from Tesco the remuneration package for the chief executive officer and the chief financial officer totalled £7.3m, yet figures show that Tesco employees are having to claim millions of pounds in working tax credits, paying people fairly benefits the whole of society.

This equal pay claim comes as the deadline for companies with more than 250 employees to publish gender pay gap figures is approaching after gender pay gap regulations came into force last year. By 4th April 2018 the companies will need to report on their own website and on a government website their gender pay gap, defined as the percentage difference between average hourly earnings for men and women (mean and median averages); their gender bonus gap (mean and median averages); the proportion of men and women receiving bonuses and the proportion of men and women in each quartile of the organisation’s pay structure. This reporting must then be repeated annually. By this week 854 companies had already reported on the government website.

Tesco has published gender pay gap figures on its website based on the government’s requirements for the April 2015 to April 2016 financial year. These show a mean pay gap of 14% and a median pay gap of 8.6% which compares with the UK median pay gap of 18.1% according to Office of National Statistics figures. The supermarket said it was actively working to tackle its gender pay gap with actions including a support network for its female staff, training for line managers so they can understand unconscious bias and then manage and challenge how this might impact people in the workplace and improved access to coaching support for women who are seen as high potential for business leadership roles in the future.

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