Tesco faces employment tribunal over claim it helped set the ‘market rates’ used to justify pay gap

On Friday 1 May 2026 the tribunal is due to begin hearing Tesco’s defence for paying store staff less than distribution centre workers. 

The shop workers say Tesco cannot defend the pay disparity on the grounds that it was following market rates, when in fact the powerful supermarket giant is the largest private employer in the UK and will have had influence on the pay decisions it made.

The hearing marks a key stage in the long-running legal action, with Tesco now required to explain why predominantly female store workers have historically received lower pay than predominantly male colleagues in distribution roles, despite the roles being assumed to be of equal value for the purposes of this stage.

In legal documents put before the tribunal, the claimants allege that Tesco’s defence rests on the assertion that it paid store workers less because it suited its commercial interests to do so, and that many of the explanations given by the company do not account legally for the difference in pay.

A central pillar of Tesco’s case is expected to be that store and distribution centre workers are recruited from different labour markets, with different “market rates” of pay. The claimants say this does not legally justify the pay gap. Instead, so-called market rates simply describe the very inequality that equal pay law is designed to address.

The claimants also allege that Tesco had control over how pay was set across its business, including at the most senior levels, and that it cannot rely on market forces where it exercised its own power to determine pay levels. They argue Tesco had the capacity to set wage levels within those markets, and any reliance on external benchmarks hides internal decision-making about how much to pay different groups of workers and why those decisions were taken.

In legal submissions, the claimants also raise questions about the nature of the markets relied on by Tesco. They allege that these markets may themselves be shaped by longstanding structural differences between predominantly female store roles and predominantly male distribution roles, including the prevalence of part-time work in stores and full-time work in distribution. They argue that where an employer has contributed to or benefited from such divisions, it cannot rely on them as a neutral explanation for pay differences.

The claimants contend that Tesco’s reliance on cost as a justification is misplaced. They argue that the company’s case amounts to saying that paying store workers more would have been more expensive, which they say is not a sufficient basis in law to justify unequal pay.

They also allege that Tesco has put forward a wide range of overlapping and inconsistent factors to explain the pay gap, without providing clear and specific evidence about how those factors actually determined pay levels in practice.

The tribunal is due to hear evidence from a number of current and former senior figures at Tesco. This includes the current and former UK and ROI People Directors Alison Cheung and Judith Nelson, the current Chief People Officer Emma Taylor, as well as the former UK Distribution and Fulfilment Director Andrew Woolfenden and former Chief Financial Officer Alan Stewart.  

The tribunal will also hear expert evidence from Canadian-American labour economist Professor David Card, who was awarded the 2021 Nobel Memorial Prize in Economic Sciences for his empirical contributions to labour economics, who has been called to give evidence by Tesco.  

A judgment is expected later this year. Lawyers at law firm Leigh Day, who represent over 17,000 workers, say the outcome could have significant implications not only for Tesco workers, but for equal pay claims across the retail sector.

Paula Lee, employment partner at Leigh Day, said:

“These hearings go to the heart of why Tesco is paying its store workers less than their colleagues in distribution. 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. In legal documents before the tribunal, 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.

“Our clients say that pointing to market rates in those circumstances does not explain the inequality - it risks entrenching it. They believe the evidence will show that there is no lawful justification for continuing to pay predominantly female store workers less for work of equal value, and that this is a moment of real accountability after years of litigation.”