Asda workers won the first stage of a legal battle in the UK Supreme Court on Friday over equal pay, which could lead to a £500m ($689m) compensation claim.
While the ruling is not the end of the fight, the decisions means that Asda store workers are entitled to compare themselves with distribution staff for equal pay purposes.
Previously, Asda bosses claimed that store jobs are not comparable to distribution centre jobs. Friday's ruling comes after Supreme Court justices heard arguments at a hearing in July 2020.
The judgement is the first hurdle of a three-stage process. The claimants will have to prove in the second stage that the roles are of "equal value." A potential third round will then examine if there are any other factors — other than gender — why the roles should not be paid equally.
It comes after a long standing battle. Over 40,000 Asda store workers — about two-thirds of whom are women — brought equal pay claims after complaining that staff working in distribution depots were unfairly paid more.
The Court of Appeal ruled, in January 2019, that the roles of store workers could be compared to those of warehouse staff, upholding rulings made by an employment tribunal in 2016 and the Employment Appeal Tribunal in 2017.
Asda bosses appealed against the previous rulings that workers in the chain's shops, who are mostly women, should be on comparative salaries with depot staff, who are mainly male.
The Supreme Court ruling on the claim, which could have a huge impact for equal pay fights in the retail sector, is thought to be the largest of its kind in the private sector.
"This is a significant victory for shop floor workers in the long-running battle between supermarkets and their employees. Today’s ruling sets a strong precedent for other claims against large supermarkets," said Andrew Nugent Smith, Managing Director of class action law firm Keller Lenkner UK.
Unions have also hailed the ruling, which could open the door for other equal pay claims against other supermarkets and retails, totalling as much as £8bn.
The GMB trade union said it is a "massive victory" for Asda shop floor workers, and the union said that it seeks to meet with Asda bosses to "discuss" a potential £500m compensation for store workers. The store workers are members of GMB union.
"This is amazing news and a massive victory for Asda’s predominantly women shop floor workforce. Asda has wasted money on lawyers’ bills chasing a lost cause, losing appeal after appeal, while tens of thousands of retail workers remain out of pocket," Susan Harris, GMB legal director, said.
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According to law firm Leigh Day, who are representing the store workers, distribution depot workers get paid between £1.50 and £3.00 an hour more. The law firm has made sex-discrimination claims over the disparity in pay.
"Today’s ruling highlights that women on the shop floor are battling just as hard for equality as women in the boardroom. The win for Asda store staff is a huge step forward for female workers up and down the country," said David Kelly, EMEA general manager of workforce management app company, Deputy.
An Asda spokesperson said: "This ruling relates to one stage of a complex case that is likely to take several years to reach a conclusion. We are defending these claims because the pay in our stores and distribution centres is the same for colleagues doing the same jobs regardless of their gender.
"Retail and distribution are very different sectors with their own distinct skill sets and pay rates. Asda has always paid colleagues the market rate in these sectors and we remain confident in our case."
The supermarket announced a restructuring plan in February, while 4,500 jobs could be created in online operations, about 3,000 back office jobs could be axed elsewhere in the business.
It said that it also plans to shut Asda's Dartford and Heston home shopping centres as it moves towards picking and packing online orders in-store rather than at separate facilities — a move which puts around 800 jobs on the line.
In October last year, the supermarket's owner Walmart (WMT) agreed a £6.8bn sale to billionaire petrol station entrepreneurs the Issa brothers and British private equity firm TDR Capital.