Next wins key appeal in equal pay battle with thousands of workers

Next has won a significant round in its long-running equal pay battle with thousands of predominantly female retail workers after an appeal tribunal overturned a key ruling against the retailer.

The Employment Appeal Tribunal found that the original tribunal had made an error of law when considering whether Next could justify paying its warehouse operatives more than its retail sales consultants.

The case, covering the period between 2012 and 2023, centres on retail workers whose jobs had previously been found to be of equal value to warehouse roles.

Around 77.5% of Next’s retail sales consultants were women during the period, while its Yorkshire warehouse workforce was broadly gender-balanced.

The basic hourly pay gap between the groups ranged from 92p in 2012 to 38p in 2023.

An Employment Tribunal had previously rejected Next’s defence of the basic pay differential, concluding its arguments around market forces, recruitment and business performance ultimately amounted to cost-saving and that the retailer could have afforded to equalise pay.

However, Mr Justice Bourne, sitting in the Employment Appeal Tribunal, ruled on September 7 that the tribunal had asked the wrong question.

He found that it should have considered why warehouse employees were paid more and whether that reason could objectively justify the difference, rather than focusing on whether Next could afford or needed to increase retail workers’ wages.

The judgment found that paying higher warehouse rates to recruit and retain enough workers in a competitive labour market could amount to a legitimate aim. Next had faced particularly strong competition for warehouse labour, including from Amazon at some locations.

However, the decision does not represent a complete victory for Next.

The EAT upheld the finding that the retail workers had established “particular disadvantage” for the purposes of their indirect discrimination claims.

It also upheld findings against Next involving several other employment terms, including some lump-sum awards, Sunday and night-time premiums, overtime premiums and paid rest breaks. A finding concerning differences in long-service awards was overturned.

The workers also lost a cross-appeal arguing that Next’s reliance on market forces amounted to direct sex discrimination because those forces were influenced by historic gender stereotypes.

Mr Justice Bourne rejected the argument that direct discrimination must always be established where an employer relies on market forces without proving those forces do not disadvantage either sex.

The original tribunal had accepted evidence from Next group HR director Lionel Mason and other executives that gender played no conscious or subconscious role in setting basic pay.

It concluded: “It was all about cost. Gender did not enter into the equation.”

The judgment could have wider implications for retailers facing similar equal pay claims by clarifying how employers can seek to justify differences between store and warehouse pay.

Further hearings are expected to determine the consequences of the appeal ruling.