Governance Watch - Issue 27

by Dina Medland in London


This week in Britain we celebrated the centenary of women’s suffrage and (some) women getting the vote. For those of us who have been on social media for years it was also a moment to note how things have changed. Whereas Twitter used to be a useful disruptive tool for the relatively few, it is now a place full of megaphones and businesses and government departments too, who are adept at using it to roll out the marketing and the ‘thunderclaps.’ But who could be churlish about cheerleading for the suffragettes in grim grey February? 

This tweet from Cathy Newman of Channel 4 News summed up the real message: there’s a long way to go yet. 

Bang on cue we had the headline the next day reflecting 2018 reality: Tesco equal pay claim could cost supermarket up to £4bn. A law firm – Leigh Day - has “launched legal action on behalf of nearly 100 shop assistants who say they earn as much as £3 an hour less than male warehouse workers in similar roles. Up to 200,000 shopfloor staff could be affected by the claim, which could cost Tesco up to £20,000 per worker in back pay over at least six years” said The Guardian story.

Tesco faces £4bn equal pay claim but the shares rise. Whats going on? asked The Independent. Sheila Wild, equal pay expert at the Equal Pay Portal, said the vast claim Tesco is facing should “come as no surprise” to employers. “A situation where, as appears to be the case here, women are employed on one type of job and men on another, but the men are getting a higher rate of pay, is exactly the kind of thing equal value is aimed at,” she was quoted as saying to People Management. Its piece was headlined Tescos £4bn equal pay case could create tidal wave of litigation.

Of course, it’s not just about Tesco. The case follows similar actions against Asda and Sainsbury’s. The UK’s retail sector, stunned by a transformed marketplace, intense competition and rapidly changing consumer preferences, is already struggling. While the £4 billion figure may seem merely a headline grab, it would be foolish to ignore the potential cost of inaction.

What I wrote on Forbes four years ago now in the context of Deutsche Bank remains true: “Litigation costs are the penalties for bad corporate governance in the first place - and it is debatable as to whether they should be met by shareholders. For the reputational costs of litigation costs are likely to be a multiple of the fines paid.”

Paul Lee, the lawyer from the employment team at Leigh Day who is representing female Tesco staff, is quoted across media outlets including The Grocer, as saying: “we believe an inherent bias has allowed store workers to be underpaid for many years.”

Moving from ‘unconscious’ to ‘inherent’ in the use of the word ‘bias’ should make all businesses wake up.


It may be futile to talk of corporate governance at all if there is no individual accountability. The ongoing investigation into the collapse of Carillion, Britain’s second-largest construction company, may well turn out to be a test case on that. It has widespread implications for the use of an outsourcing business model that takes huge risks with no heed for the future (jobs) or long-term well-being (pensions) of its employees. 

For my thoughts on that, read yesterday’s post on Board Talk.


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