Shop workers at Next have won a six-year legal fight for equal pay in a landmark case that could force the retailer to pay more than £30m in compensation and bolster similar claims lodged against the big UK supermarkets.
The employment tribunal ruling will benefit 3,540 claimants, who accused Next of paying its retail sales staff – who are overwhelmingly female – lower hourly wages than its warehouse workers, the majority of which are male.
Next – which has 466 stores across the UK – had argued that the difference in pay for the two roles was based on the “market rate” for each position, and reflected the need to recruit and retain 24/7 staffing of warehouses, including for night shifts, Sundays and public holidays. The retailer said pay levels had been set in a way to ensure the “viability” of the business.
The tribunal acknowledged that the decisions were driven by efforts to cut costs and boost profit. It also accepted that the discrepancy was not due to “direct discrimination” in relation to gender, saying there “there was no conscious or sub-conscious gender influence in the way Next set pay rates”.
However, it ultimately ruled that the retailer had failed to demonstrate that lower pay was not the result of gender-based discrimination, and said financial decisions could not be used as a blanket argument against equal pay rates.
“For market forces to be a trump card in this way would defeat the objective of the legislation; lower pay in particular sectors due to indirectly discriminatory practices could then be lawfully sustained in perpetuity,” the ruling explained. “There must usually be a more compelling business reason for such arrangements to be justifiable.”
Next said it planned to appeal against the ruling.
The Next case, which covered the period from 2012 and 2023, explained women made up nearly 78% of retail sales jobs, while men made up about 53% of warehouse staff. During that time, some warehouse staff were able to earn between 40p and £3 more an hour than retail sales workers, Leigh Day, the law firm representing the workers, said.
The ruling also took into account that retail staff had access to amenities that were not available to warehouse staff, but said that the “idyllic portrayal of the advantages of the workday of a sales consultant against the grim endurance of the warehouse worker painted in written submissions of the respondents was something of a parody”.
Elizabeth George, a Leigh Day partner and barrister representing the claimants, said the ruling was “hugely significant” and the case was “exactly the type of pay discrimination that equal pay legislation was intended to address”.
The tribunal will decide on compensation and back pay, which could extend up to six years. Hourly pay will also be equalised in the current contract, and staff will also be handed paid rest breaks, and equal pay for Sunday, night time and overtime shifts, in line with those offered to warehouse staff.
Leigh Day said it could force Next to pay out more than £30m in total.
after newsletter promotion
Next reported £918m in annual pre-tax profits for 2023, up 5% from a year earlier.
Next said it plans to appeal against the ruling. “In respect of the specific terms in which the claim succeeded, it is our intention to appeal. This is the first equal pay group action in the private sector to reach a decision at tribunal level and raises a number of important points of legal principle”, the retailer said in a statement.
It is the first successful equal pay claim of its kind against a national UK retailer, according to Leigh Day, and was likely to set precedent in similar cases its lawyers are coordinating against the big supermarkets.
More than 112,000 store staff are bringing “similar equal pay claims” against Asda, Tesco, Sainsbury’s, Morrisons and Co-op, through Leigh Day. Its lawyers said they expected the Next judgment to be “closely scrutinised by all the retail heavyweights. The tribunal has made it clear that relying on market rates in itself is not a valid defence in equal pay claims of this type.”
Leigh Day added: “Each case will be decided on its own particular facts, but the success of the Next staff will be a huge encouragement to all these cases.”