Next overturns £30m equal pay ruling on market forces

The Employment Appeal Tribunal has overturned the central part of a 2024 decision against Next, which had found the retailer wrong to pay warehouse staff higher basic pay than shop floor staff doing work of equal value.

The tribunal accepted that recruitment and retention pressures in the warehouse justified the higher rate.

More than 3,500 current and former employees, mainly women, had been set to share potentially more than £30m in back pay under the earlier judgment.

Next called the outcome a "landmark victory" and said it had succeeded on the key issue of basic pay.

Leigh Day, the law firm acting for the store workers, described the conclusion on basic pay as "disappointing" and said it will appeal.

The store workers did not lose everything. Leigh Day said the appeal judges upheld the 2024 findings on night-time premiums, overtime premiums and paid rest breaks.

Next said it will seek permission to appeal those parts.

Both the original Employment Tribunal and the Appeal Tribunal found no direct sex discrimination in Next's pay rates. Shop floor staff are predominantly women; warehouse workers are predominantly male.

The decision matters well beyond one retailer. Tesco, Asda, Morrisons and Sainsbury's are all defending similar long-running equal pay claims and will read the reasoning closely.

Public bodies are exposed too. Thousands of female workers at Birmingham City Council learned last year what they would receive under an equal pay settlement, and Brighton and Hove City Council is facing over 1,000 equal pay cases.

For an employer setting pay, the practical point is narrow rather than sweeping. Next's argument was that it had to pay a higher market rate for warehouse operatives because of recruitment and retention pressures that did not apply in its stores, and the tribunal accepted that rationale.

In Next's words, the judgment confirms that paying what is needed to recruit one group "does not oblige them to raise the pay of other employees where there is no reason to do so".

That defence rests on evidence. A founder paying engineers more than support staff for work of arguably equal value now has a route through, but the route runs through documented recruitment and retention difficulty, not a hunch about what the market pays.

The premium elements went the other way, which is the second lesson: the justification has to be tested pay component by pay component, not applied to the whole package at once.

And the case is not finished. Both sides intend to appeal the parts they lost.

More: Next's corporate site