Tesco has argued at an employment tribunal that equalising pay between store staff and warehouse employees would ignore “economic reality” and could have “the potential to inflict serious damage”, as the supermarket group attempts to resist an unequal pay claim that may carry a multibillion-pound cost.
As reported by the Financial Times, at a hearing in Reading on Friday (1 May), the retailer set out legal submissions defending pay differences that mean shop workers can earn up to £5.50 ($7.46) an hour less than colleagues working in distribution centres.
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The case forms part of a wider series of equal pay disputes involving some of the UK’s biggest retailers. In those claims, workers have secured several legal wins after contending that lower-paid jobs should be treated as having equal value to better-paid roles.
Tesco, Asda and Morrisons have each had to account for their pay structures before employment tribunals, while another case involving Morrisons began this week in Leeds.
A tribunal decision in 2024 on equal pay at Next went partly against the retailer, although claims of direct discrimination and complaints relating to bonus payments were not upheld.
Next is challenging other elements of that ruling, with a further hearing scheduled for June. Proceedings against Tesco, one of the UK’s largest private sector employers, began in 2018.
The claim argues that store workers – most of them women – are paid substantially less than employees in Tesco’s distribution network, where close to 90 per cent of staff are men.
Around 60,000 workers are involved in the action, which also seeks six years of back pay covering 2012 to 2018.
Leigh Day, the law firm representing about 17,000 current and former Tesco employees, has put the overall value of the case at £4bn.
Tesco has said the figure could amount to £1.7bn across 250,000 workers.
The Reading tribunal on Friday considered Tesco’s material factor defence, under which the company must show that the pay differences do not stem from gender.
In its written arguments, Tesco called the matter “an extraordinary case” and said the gap in pay was determined by market conditions and “genuine pressing operational needs”.
“It reflects the commercial and operational judgements that any employer of this type and size was required to make if it was to remain viable, competitive and able to continue employing hundreds of thousands of colleagues across the UK,” it wrote.
Tesco also said that a ruling against it could lead to possible industrial action among warehouse staff over pay and might create a situation in which some employees are paid more than their managers.
“Tesco submits that, the law not being an ass, this is not an outcome that should ever be reached. But this is that for which the Claimants nonetheless contend.”
Leigh Day employment partner Paula Lee said: “Tesco is expected to rely heavily on so-called market rates, but our clients’ case is that those markets are not neutral or external forces operating beyond Tesco’s control.
“It is alleged that Tesco had substantial influence over how pay was set and operated within a system that it helped shape over many years.”
The hearing is expected to continue for five weeks, with a decision due later this year.
