Landmark Equal Pay Claim Against Next: Sales Assistants Could Receive £30 Million
In a significant victory for thousands of former and current employees, Next, the high street retailer, faces a potential payout of £30 million in a landmark equal pay claim. The six-year legal battle, involving 3,540 claimants, may open the floodgates for similar cases in the future. The employment tribunal ruled that Next failed to provide sufficient evidence to justify the lower basic wage paid to sales assistants compared to warehouse operatives, suggesting possible sex discrimination.
The tribunal revealed that between 2012 and 2023, 77.5 percent of shop workers at Next were female, while 52.75 percent of warehouse operators were male. Under the law, work of equal value within the same company must be remunerated at the same rate, unless the employer can demonstrate that the difference in wages is due to a “material factor” unrelated to sex discrimination.
Next argued that the discrepancy in pay between the two roles was driven by the “market rate” for a retail worker, which was lower than that of a warehouse operator. The retailer claimed that this pay structure was necessary for the viability of their business. The tribunal acknowledged that the difference in pay was not a result of direct discrimination or gender bias influencing pay rate decisions, but rather an effort to reduce costs and enhance profits. Next reported pre-tax profits of £918 million in 2023.
However, the ruling stated that the “business need was not sufficiently great as to overcome the discriminatory effect of lower basic pay.” It emphasized that there should typically be a more compelling business reason to justify such pay arrangements. Next intends to appeal against the ruling, while some commentators and politicians have expressed concerns about the government’s intervention in determining employee wages.
This equal pay claim against Next is the first of its kind to secure a win against a national retailer. Law firm Leigh Day, representing over 112,000 staff from supermarket chains Asda, Tesco, Sainsbury’s, Morrisons, and Co-op who are bringing similar cases, stated that this victory is hugely significant. The barrister representing the claimants, Elizabeth George, emphasized that paying women less in female-dominated jobs compared to male-dominated jobs, when the work is equal, is a clear violation of equal pay legislation.
George argued that employers cannot simply justify paying women less by pointing to the market rate for the jobs. The tribunal made it clear that employers must go further to justify pay differentials. It concluded that Next could have afforded to pay a higher rate but chose not to, solely for financial reasons. The compensation awarded to the workers should not be seen as a windfall, but rather as the pay they were entitled to if Next had fulfilled its equal pay obligations.
Helen Scarsbrook, who has worked for Next for over 20 years and was one of the named claimants, expressed her satisfaction with the ruling. She highlighted the demanding and often undervalued nature of customer service in her statement. Next operates 466 stores in the UK and employs 22,873 sales consultants.
Despite the ruling, Next plans to appeal, stating that the tribunal rejected the majority of the claims made by the claimants, including direct discrimination and bonus pay. The company believes that the case raises important points of legal principle. Lord Frost, a Conservative peer, criticized the decision on social media, suggesting that it moves the UK further away from being a market economy and that more cases like this may arise if labor market reforms proposed by the Labour Party are implemented.
The ruling had a slight impact on Next’s share price, which decreased by almost 1 percent on Tuesday afternoon.
