Tesco faces tribunal test on equal pay defence as Reading hearing continues

Tesco has argued before an employment tribunal in Reading that equalising pay between its store staff and warehouse employees would disregard economic reality and risk serious damage to the business. The supermarket group maintains that the current pay gap is justified by market conditions and operational requirements, noting that shop workers can earn up to £5.50 an hour less than colleagues in distribution centres.

This legal challenge forms part of a wider series of equal pay disputes affecting major UK retailers, including Asda and Morrisons. The tribunal is currently assessing Tesco's material factor defence, which requires the company to demonstrate that pay differences are not rooted in gender but stem from legitimate business reasons. The retailer contends that the disparity reflects commercial judgements necessary to remain viable and competitive while employing hundreds of thousands of staff across the UK.

The case involves approximately 60,000 workers, predominantly women in stores versus men in logistics, and seeks back pay dating from 2012 to 2018. Represented by the law firm Leigh Day, the claimants value the overall case at £4bn. In contrast, Tesco estimates the potential cost at £1.7bn across a broader workforce of 250,000 workers, though the specific scope of the current claim remains the focus of the proceedings.

During the hearing on 1 May, Tesco characterised the matter as extraordinary and warned that a ruling against it could lead to industrial action among warehouse staff or result in employees being paid more than their managers. The company submitted that such an outcome should not be reached, arguing that the pay structure was shaped by genuine pressing operational needs rather than discriminatory intent.

However, Leigh Day challenges the notion that market rates are neutral external forces. The firm alleges that Tesco had substantial influence over how pay was set within a system the company helped shape over many years. Paula Lee, an employment partner at Leigh Day, stated that the firm expects Tesco to rely heavily on market rates, which the claimants argue are not outside the retailer's control.

The Reading tribunal is expected to continue hearing the case for five weeks, with a final decision due later this year. The outcome will determine whether Tesco's material factor defence holds sufficient weight to justify the wage disparity or if the tribunal finds the differences to be gender-based.