Asda Faces Legal Challenge Over Equal Pay Claims from Employees

Last month, a significant legal development occurred in the ongoing case against supermarket giant Asda, where tens of thousands of employees are suing the company over claims of unequal pay. The lawsuit alleges that shopfloor workers, primarily women, receive lower wages than their warehouse counterparts, who are predominantly men, in violation of equal pay legislation.

This latest hearing follows a recent legal victory for employees at Next, where an employment tribunal ruled that the retailer could not justify the pay disparity between its warehouse staff, primarily men, and its shopfloor workers, who are mostly women. Next has indicated plans to appeal the decision, which could potentially lead to compensation amounting to £30 million for the claimants. The case was represented by law firm Leigh Day and funded by Harbour Litigation Funding.

The legal landscape is evolving, with similar challenges now emerging against other major retailers, including Morrisons, Tesco, Sainsbury’s, and the Co-op. Leigh Day confirmed that all its equal pay cases against supermarkets are being pursued under a damages-based agreement, encompassing over 100,000 retail employees across the UK. Harbour Litigation Funding is also backing claims against Sainsbury’s, Morrisons, and Tesco.

David Williams, an employment partner at the City law firm Fox Williams, highlighted the growing concerns within the retail sector. “There’s quite a degree of concern in the retail industry, coming from various sources. The potential liabilities are enormous due to the large number of people in the sector and a history of businesses not taking equal pay seriously,” he noted. “This serves as a wake-up call for many companies to audit their practices and address salary disparities.”

Another litigation funder, Therium Capital Management, is supporting the case against Tesco. Established in 2008, Therium manages 12 separate litigation funds that collectively support claims valued at $36 billion, with a notable track record of backing high-profile legal actions, including cases against the Post Office and supporting Noel Edmonds in his dispute with Lloyds Bank.

Litigation funders typically raise capital from sources like hedge funds and sovereign wealth funds to finance various claims, with profits from successful cases facilitating further investments in legal actions. While this funding model enhances access to justice, it has drawn criticism for potentially breaching common law principles of champerty and maintenance, which traditionally prohibited third-party funding of legal disputes for profit.

The surge in class action lawsuits and third-party funding has raised alarms within the business community. A recent report by the Adam Smith Institute warned that these legal mechanisms expose many companies to claims worth billions. The US Chamber of Commerce has also been active in lobbying against the proliferation of class action litigation and associated funding models in the UK and Europe, arguing that they reflect contentious practices prevalent in the United States.

In England and Wales, two no-win, no-fee agreements are now common. The traditional model allows lawyers to take an uplift of up to 100% on their standard fees for winning cases, while the newer damages-based agreements permit lawyers and their third-party backers to claim up to 50% of awarded damages, stirring unease among defendant companies facing potential litigation.