Tesco Faces Equal-Pay Case That Seeks Up to $5.6 Billion

Updated on
  • Law firm says Tesco underpays mostly female shop-floor staff
  • U.K. companies must soon make public their gender-pay gaps

As the U.K. forces companies to disclose the gap between men’s and women’s pay, the country’s biggest private employer is confronted with a massive demand from workers feeling short-changed.

Supermarket chain Tesco Plc has been presented with claims that law firm Leigh Day says could eventually total as much as 4 billion pounds ($5.6 billion). The firm contends that female shop-floor workers are unfairly paid less than their male counterparts in warehouses and says more than 200,000 workers could be entitled to compensation.

“There really should be no argument that workers in stores, compared to those working in distribution centers, contribute at least equal value to the vast profits made by Tesco,” Leigh Day lawyer Paula Lee said. Tesco said it hadn’t received the claims.

The demands come as the U.K. implements new rules requiring any company employing more than 250 people to disclose the disparity in pay between men and women by April. Tesco is particularly exposed because of its size as well as a recent push to put thousands more staff on its shop floors in a bid to soften its hard-nosed image among U.K. consumers.

Staff in Tesco’s stores are paid around 8 pounds an hour, while their counterparts in distribution centers may get in excess of 11.50 pounds, Leigh Day said. The firm said it has been approached by more than 1,000 people either currently or formerly employed by Tesco.

Highest Earners

The grocer previously said that men on average were paid 14 percent more than women in the year through April 2016. Of Tesco’s lowest paid workers 62 percent are women, but only 41 percent of its highest earners are female. A Tesco spokesman said the company “works hard to make sure all our colleagues are paid fairly and equally for the jobs they do.”

Tesco’s shares were down 0.8 percent at 9:50 am in London.

“If the Tesco employees are equally successful then all major retailers, and indeed businesses more generally, could be exposed to a tidal wave of equal pay litigation,” Crowley Woodford, an employment lawyer at Ashurst, said in an email.

The publication of the British Broadcasting Corp.’s highest earners revealed substantial differences between men and women at the top of the organization, while EasyJet Plc’s new male chief executive officer took a pay cut to match the salary of his female predecessor.

Leigh Day specializes in human-rights cases that have turned it into a thorn in the side of large companies. Among other things, it represented Nigerian villagers against Royal Dutch Shell Plc over oil spills.

Similar Claims

The Tesco case follows similar claims by Leigh Day against two other U.K. supermarket operators -- Walmart Inc.’s Asda and J Sainsbury Plc. In the Asda case, which more than 15,000 workers have joined, an employment tribunal found that the lower-paid store staff can compare themselves to the distribution-center workers.

“The difference in pay is probably due to the nature of the work rather than gender, but the Tesco claim could have big repercussions across other retail businesses,” according to Maureen Hinton, director at retail researcher Conlumino.

For all retail staff, work is already becoming less secure. Amid a shift to online shopping and warehouse automation there was a 3.9 percent drop in the number of hours worked in the U.K. retail industry in the fourth quarter, according to the British Retail Consortium.

For the retailers, the threat of a further bump in staffing costs is unwelcome. The likes of Tesco have borne the brunt of recent increases in the U.K.’s minimum wage, as well as cost increases stemming from the fall in the pound after the country’s vote to leave the European Union.

— With assistance by Jess Shankleman

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