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Tesco pay showdown contains a wider warning

Any company that does not pay on the basis of the value that different roles generate has a potentially costly blind spot
A company logo is pictured outside a Tesco supermarket in Altrincham northern England, in 2016. REUTERS/Phil Noble/File Photo

By Carol Ryan

LONDON (Reuters Breakingviews) - Tesco’s pay showdown contains a warning for other employers. A claim that female shop workers should get the same wage as male warehouse staff could cost Britain’s largest supermarket up to four billion pounds (C$7 billion). It’s a lesser-known twist in the increasingly heated battle over gender pay imbalances. While retailers Asda and Sainsbury’s face similar legal challenges, all sectors are potentially exposed.

The case, currently at the first stage of the Employment Tribunal process, will argue that paying Tesco’s predominantly female store staff up to three pounds less per hour than their largely male warehouse colleagues is discriminatory. While the principle of the same pay for the same role is well understood, employees with ostensibly very different job descriptions are entitled to the same wage if it can be legally shown their work brings equal value to a company. The UK’s Equal Pay Act has had an “equal value” provision since the mid-1980s, but the current debate around gender equality and new pay gap reporting measures in the U.K. are leading to greater scrutiny of women’s wages.

These kinds of pay challenges have been more common in the public sector; women working as home carers for Birmingham City Council successfully argued that the value of their work was comparable to better-paid male refuse collectors. It may now spread to the private sector. The start of legal proceedings, announced on Wednesday, barely moved Tesco’s share price, which looks complacent. If the challenge is successful, the supermarket could face a bill of up to four billion pounds based on the six years’ of back-pay that an estimated 200,000 workers may be entitled to.

That’s far more of a financial threat than embarrassment caused by public airings of what companies on average pay men and women, which can be distorted by the fact that men currently tend to occupy higher-paid positions. Retailers with large, low-paid female workforces look particularly vulnerable to equal-pay claims. But any company that does not pay on the basis of the value that different roles generate has a potentially costly blind spot. Tesco is likely just the most high-profile name in a much bigger reckoning.

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