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Britain's Tesco faces record $5.6 billion equal pay claim

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02/07/2018 | 03:04pm CEST
FILE PHOTO: A Tesco supermarket is seen in west London

LONDON (Reuters) - Supermarket group Tesco (>> Tesco) is facing a potential bill of up to 4 billion pounds ($5.6 billion) in a record equal pay claim involving mainly women workers at its British stores, according to the law firm pursuing the case.

LONDON (Reuters) - Supermarket group Tesco (>> Tesco) is facing a potential bill of up to 4 billion pounds ($5.6 billion) in a record equal pay claim involving mainly women workers at its British stores, according to the law firm pursuing the case.

If the claim is successful it could have huge implications for British industry. However, it is likely to be bogged down in the courts for years.

Tesco is Britain's biggest retailer and its largest private sector employer with more than 310,000 staff.

Law firm Leigh Day said on Wednesday the mainly male employees in Tesco's distribution centers were paid considerably more than its largely female store workers.

The law firm is also working on claims against supermarket rivals Asda, the British arm of Walmart (>> Wal-Mart Stores), and Sainsbury's (>> J Sainsbury), which date back to 2012 and 2015 respectively.

Unequal pay for men and women is currently a hot topic in Britain's boardrooms and corridors of power. The resignation last month of Carrie Gracie as China Editor for the BBC led to an investigation into pay differences at the public broadcaster.

British Business Secretary Greg Clark told Sky News he was "surprised" by the scale of the claim against Tesco.

A Tesco spokesman said the firm had not yet received a claim.

"Tesco has always been a place for people to get on in their career, regardless of their gender, background or education, and we work hard to make sure all our colleagues are paid fairly and equally for the jobs they do," he said.

Tesco shares fell as much as 3 percent, but had recovered to trade up 0.6 percent at 1350 GMT.


Leigh Day operates on a no win, no fee basis and takes 25 percent of any compensation obtained by its clients.

The law firm said Tesco distribution center staff may earn in excess of 11 pounds an hour, while the most common grade for store staff saw them receive around 8 pounds per hour.

This disparity could see a full time distribution worker on the same hours earning over 100 pounds a week - or 5,000 pounds a year - more than store staff.

Leigh Day said more than 200,000 Tesco employees may be underpaid and estimated shortfalls could reach 20,000 pounds each, meaning the potential bill for Tesco could be as high as 4 billion pounds.

The law firm said it had already started submitting claims on behalf of its clients through conciliation service ACAS, the first stage in the Employment Tribunal process, and had been approached by over 1,000 current and former Tesco employees.


Crowley Woodford, employment partner at law firm Ashurst, said if the Tesco employees' claim was successful "all major retailers, and indeed businesses more generally, could be exposed to a tidal wave of equal pay litigation."

In 2012, Birmingham city council agreed to pay about a billion pounds to settle the claims of tens of thousands of women workers.

However, the progress of private sector claims is slow.

Last August, Britain's Employment Appeal Tribunal backed an October 2016 ruling that Asda workers in shop floor roles could compare their jobs with those done for higher wages in warehouses.

Asda is taking the case to the court of appeal in October. It argues the demands of jobs in stores and depots are very different and it pays market rates.

A spokesman said that while Asda was pursuing the appeal the case continued through the Employment Tribunal.

"In the next stage (it) will decide whether the jobs of the store colleagues and the warehouse colleagues are of equal value. Because multiple jobs are being compared this will be a complicated exercise," he said.

($1 = 0.7147 pounds)

(Editing by Guy Faulconbridge and Mark Potter)

By James Davey

Stocks treated in this article : Wal-Mart Stores, Tesco, J Sainsbury
Stocks mentioned in the article
ChangeLast1st jan.
J SAINSBURY 2.61% 338.2 Delayed Quote.36.54%
TESCO 0.67% 256.2 Delayed Quote.21.62%
WAL-MART STORES 9.64% 98.945 Delayed Quote.-8.00%
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Financials (GBP)
Sales 2019 28 804 M
EBIT 2019 725 M
Net income 2019 427 M
Debt 2019 1 426 M
Yield 2019 3,26%
P/E ratio 2019 17,41
P/E ratio 2020 15,19
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