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The Employment Appeal Tribunal ruled that Next can pay its warehouse staff higher hourly rates than shop floor employees, overturning a previous judgment that empowered massive equal‑pay claims. The decision is seen as a watershed moment for retailers facing potential billions in compensation.
Tribunal rules FTSE 100 group is justified in paying warehouse workers more than mostly female shop workers The UK Employment Appeal Tribunal has ruled that retailer Next is justified in paying warehouse workers a higher hourly rate than shop floor staff.
Photographer: Chris Ratcliffe/Bloombergis justified in paying warehouse workers a higher hourly rate than shop floor staff, overturning a controversial ruling that had strengthened multibillion-pound equal pay claims against Britain’s largest retailers. The judgment annuls the most controversial element of a 2024 ruling that said Next had not sufficiently justified its policy of paying shop staff, who are mostly women, lower rates of basic pay than staff in its warehouses, where the gender split is more even.
Next on Monday described the decision as a “landmark victory” that removed a threat to the viability of many of its stores. The tribunal’s ruling marks the latest stage in an eight-year fight over equal pay that is being closely watched by UK supermarkets, which are fighting similar challenges that could leave them liable for compensation running into billions.
Ronan and Conor Burke: ‘Suddenly, every financial institution needed a solution to a problem we had spent years preparing to solve’ Next said the crucial element of Monday’s ruling was its confirmation “that it was justifiable for Next to rely on market forces . . . where there was a good rationale to pay one group more than another”.
The FTSE 100 retailer had argued that it needed to pay its warehouse staff higher hourly rates in order to recruit and retain them, even though the work they performed had been assessed as being of equal value to that of store staff. Leigh Day, a law firm representing thousands of current and former Next workers, said the court’s conclusion on basic pay was “disappointing”, while noting that it had upheld previous findings against the retailer’s practice of paying store workers less for night and Sunday shifts, overtime and rest breaks.
Elizabeth George, partner at Leigh Day, said that if an employer needed only to show it paid market rates to justify discrimination, “the very market conditions that give rise to the discrimination then become the legal justification”. Next, however, said the judgment affirmed “a principle at the heart of any effective employment market”, adding that had it gone the other way, “it would have created a threat to the viability of many of our stores”.
It plans to seek permission to appeal against the outstanding findings on pay for overtime, night and Sunday shifts and rest breaks. The Appeal Tribunal said the previous ruling had “erred in finding that the employer did not pursue a legitimate aim when setting different rates of pay”. It continued: “The aim, taken as a whole, of paying higher rates to warehouse staff included recruitment and retention factors which did not apply to the claimant group.
It was not necessary for the employer to justify not increasing the claimants’ pay to the same level. ” The ruling has wider significance because the question of whether “market forces” can justify paying different rates for work of equal value is central to other long-running claims against some of the UK’s biggest retailers, including supermarkets Tesco, Asda, Morrisons and J Sainsbury.
Tesco, whose bill for compensation could approach £4 billion on one Leigh Day estimate, told a tribunal this year that pay differentials were shaped by market conditions and “genuine pressing operational needs”, and that paying store staff the same as warehouse workers would “disregard economic reality”. The court actions could also be closely watched outside the UK, as European governments grapple with how to implement a new EU directive on pay transparency that will introduce new requirements for employers to report pay gaps and correct them where they identify unjustified inequalities.
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