Retales™: Cost-cutting measures can lead to discrimination claims

With the continuing decline in consumer confidence, retailers are facing mounting pressure to cut costs across the workforce. Some retailers have responded by introducing changes to working hours. However, this requires careful consideration, as implementing such changes can lead to discrimination claims. A Laura Ashley employee was recently awarded nearly £10,000 after her working rotas were changed, on the basis that this constituted indirect sex discrimination. At a time when many retailers are facing financial difficulties, the case is an important reminder that changing terms of employment, however cost-effective, may give rise to costly discrimination claims.

When the employee started work at a Laura Ashley store, it was agreed that she would work mornings, for 20 hours a week. She could not work outside these hours as only she could collect her son (who had an attention deficit disorder) from school. By April 2010, the store was losing £250,000 each year and Laura Ashley proposed a new, less flexible rota. There was a warning that the rota could cause redundancies. The employee could not do any of the shifts proposed and it was eventually agreed that she would move to another role, for 16 hours a week. The employee claimed that Laura Ashley had indirectly discriminated against her on the grounds of her sex by imposing the new rota. This led to a drop in her hours, loss of earnings and considerable stress, resulting in four months' sickness absence.

The Northern Ireland industrial tribunal upheld the claim. One third of the female workforce had considerable difficulties with the new rota because of their primary care responsibilities, but this was not the case for the male employees. Significantly, the tribunal considered that Laura Ashley did not provide any evidence to suggest that the new rota was more than a cost-cutting exercise. The rota was not a proportionate means of achieving the aim of cutting costs and Laura Ashley had simply not taken into account the discriminatory effect of the imposition of the rota on female employees.

In the current climate, retailers are clearly focused on exploring the best ways to reduce costs. However, whilst changing terms of employment may be beneficial for business, they can also be discriminatory. Retailers should therefore consider both the purpose and impact of proposed changes at the outset, alongside potential, less discriminatory, alternatives, particularly as cost alone may not be sufficient to justify indirect discrimination.

If you would like further guidance on how to introduce cost-effective changes to your business and minimise the risk of potential discrimination, please contact Nick Thorpe, Employment Partner.