Next overturns equal pay ruling that raised basic wages for shop staff

Retailer wins appeal against 2024 decision forcing it to pay shop workers the same as warehouse employees

The UK retailer Next has overturned a 2024 court ruling forcing it to pay its shop staff the same higher basic pay rates as its warehouse workers under equal pay rules.

The chain, led by the Conservative peer Simon Wolfson, said it had “won a landmark victory in its ongoing equal pay litigation”. It has succeeded in its appeal to the employment appeal tribunal “on the key issue of basic pay”, it said.

It comes two years after 3,540 claimants won a six-year legal fight for equal pay , which the fashion and homeware retailer then appealed against. Shop workers accused Next of paying its retail sales staff – who are predominantly female – lower hourly wages than its warehouse workers, the majority of whom are male.

Since that employment tribunal ruling in Leeds, several thousand more Next staff have brought equal pay claims, bringing the total number of claimants involved in the litigation to more than 6,400. Next employs more than 20,000 store staff across 458 stores in the UK and Ireland.

Next said the appeal judgment endorsed its position that it “should not have to pay shop assistants and warehouse operatives the same amount of basic pay, in circumstances where the market and working conditions are very different”.

The retailer argued that it had to pay a higher market rate to warehouse staff because of recruitment and retention pressures, which it said did not apply to the workforce in its stores. It added: “Next believes this element of the judgment is not only correct in law, but also a victory for common sense.”

The retailer said the judgment affirmed: “Employers must be able to pay what is necessary to recruit the people they need; and that doing so does not oblige them to raise the pay of other employees where there is no reason to do so.”

The law firm Leigh Day, which represents Next store workers, described it as a “mixed ruling” as it rejected Next’s challenge to the tribunal’s findings that it had failed to justify lower rates of night-time pay, overtime pay and the failure to provide paid rest breaks to store workers.

Next also failed to persuade the employment appeal tribunal that lower Sunday premium payments to store workers were justified. The appeal tribunal held that the issue remains to be determined and should return to the employment tribunal.

The Next case, which covered the period from 2012 and 2023, explained women made up almost 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 38p and £3.13 more an hour than retail sales workers, according to Leigh Day.

Elizabeth George, a partner at Leigh Day representing the claimants, said: “I am pleased that the employment appeal tribunal rejected Next’s arguments that its pay practices do not disadvantage women. They plainly do and the appeal tribunal firmly recognised that. I am also pleased that the tribunal upheld the findings on night-time premiums, overtime premiums and paid rest breaks.

“The appeal tribunal’s conclusion on basic pay is disappointing. Next pays market rates in both its stores and its warehouses in order to recruit and retain staff. The market rate is higher in the predominantly male warehouse labour market, even though the work carried out in stores has already been found to be equal work.

“While the store staff and their legal team welcome many aspects of this appeal judgment, we respectfully disagree with this approach to justification. We remain confident in our clients’ position and intend to appeal.”

Next had argued that the equal pay ruling created a threat to the viability of many of its stores, and that it put retailers operating their own warehouses at a “material disadvantage” to rivals that contract out their warehouse operations.

The original employment tribunal and the appeal tribunal found that there was no direct discrimination. The employment tribunal found : “It was all about cost. Gender did not enter into the equation” when Next set pay rates.

Next said it had won the vast majority of the terms challenged in the equal pay litigation, including bonus pay to warehouse staff previously, and now basic pay. It intends to seek permission to appeal in relation to other terms.

“This judgment has come at the right time, the UK economy desperately needs jobs and the loss of this appeal would have represented a hammer blow to retail employment in the UK,” the company said.