Tesco Shares Not Much Impacted by Adverse ECJ Ruling

Summary

  • The EU court ruled in favour of Tesco female shop floor workers in an equal pay dispute, triggering over £2.5 billion back pay claims for Tesco Plc.
  • The staff had claimed that the retailer’s female shop workers had not got equal salary for equal work compared to its male distribution workers since as long as February 2018, in a breach of European law.
  • The British grocer had though said that European law was not applicable in the UK.

In a landmark judgement, the European Court of Justice (ECJ) has ruled in favour of the Tesco workers in an equal pay case. The top European court said that the European Union’s regulations on ‘equal pay for equal work’ could be invoked in supermarket wage cases.

The female shop floor employees had accused the British supermarket giant of paying them up to £3 per hour less than the male warehouse staff for the same work.

The dispute was being handled by the EU court as it was sent to the tribunal before Britain’s Brexit transition expired at the beginning of this year.

Close to 6,000 current and former Tesco employees had taken their grievance to an employment tribunal in Watford, near London. The tribunal, in turn, asked for guidance from the Luxembourg-based Court of Justice (CJEU), which is Europe’s highest.

The company shares (LON: TSCO) were up 0.09 per cent to GBX 225.70 at the day’s close on Thursday. They opened at a value of GBX 225.35, down 0.16 per cent on 4 June.

Also Read: No drop in workers’ rights after Brexit, says Business Secretary Kwarteng

The ruling

The ruling has permitted the EU law to be taken into consideration while determining if female shop workers can compare their work to that of the Tesco warehouse staff.

The European Court of Justice said that the EU law had a direct impact on cases where “a failure to observe the principle of equal pay for female and male staff for work of equal value” was under question.

Kiran Daurka, partner - employment team, Leigh Day, a law firm that represented Tesco employees, said that if there is a single body (the ECJ) responsible for ensuring equality, the roles are simply comparable.

It was argued by the employees that the retailer’s female shop workers had not received equal pay for equal work compared to its male distribution workers since as long as February 2018, which was a breach of the UK as well the EU laws. They demanded that the company be seen as a single entity with regards to employment conditions.

The ECJ’s ruling said that such a comparison was valid since the supermarket chain is a “single source”, having the ability to correct any inequality.

Also Read: Citizens UK reports 410,000 UK supermarket workers earn less than real living wage

The impact

The decision can set in motion over £2.5 billion back pay claims for Tesco Plc, for around 25,000 female staff across its stores. These employees owe compensation from the UK retailer after being underpaid for at least seven years.

While the British grocer had claimed that European law was not applicable in the UK, its workers had argued that the retailer should be seen as a single entity with respect to its terms of employment.

Rejection of the Tesco’s argument and the ECJ’s ruling that the EU law is applicable to all British private businesses is expected to affect other retailers in the nation as well.

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