Thousands of employees at retailer Next have won a “significant” equal pay claim, as estimates suggest the pay out will be more than £30 million.
Sales consultants at the retailer, who are overwhelmingly women, were paid a lower hourly rate than the employer’s warehouse operatives. An employment tribunal has now ruled that Next failed to show that this was not due to sex discrimination.
Sales consultants received lower basic hourly pay than warehouse operatives with differences ranging from 40p to £3. Lawyers at Leigh Day, who represented the claimants during their six-year legal challenge, said that this difference in pay resulted in an average salary loss of more than £6,000 per claimant.
Compensation
Employees who brought the claim will be entitled to compensation in lieu of lost pay for up to six years from when they put in their claims and including the time that has elapsed since they put in their claims. And basic hourly pay terms for sales consultants will automatically be equalised.
The tribunal also said that store staff are entitled to paid rest breaks, as well as equal Sunday, night and overtime premiums in line with comparable terms in the warehouse contracts.
More claims to come
Leigh Day said it will continue to submit claims for Next sales consultants who were not part of the original 3,500 staff who brought the claim. The firm said it expected the number of claims to increase significantly following this ruling.
The law firm emphasised that the significance of the judgement goes beyond Next as it represents more than 112,000 store staff across the five major supermarkets, Asda, Tesco, Sainsbury’s, Morrisons and Co-op, who are bringing similar equal pay claims.
The firm said that the success of the Next staff will be a huge encouragement to all these cases.
Leigh Day lawyers added that they expect this judgment to be closely scrutinised by major retail employers and said that 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.
Demanding job
Helen Scarsbrook, one of three lead claimants representing all the Next sales consultants, said: “Anyone who works in retail knows that it is a physically and emotionally tough job. Customer service, in particular, is very demanding and we do that in addition to lots of other essential tasks that go to make Next a successful business. You become so used to having your work undervalued that you can easily start to doubt it yourself. I am so grateful to the judges for seeing our jobs for what they really are – equal.”
Elizabeth George, Leigh Day partner and barrister representing the claimants, said: “Helen and her colleagues in this claim have achieved something hugely significant. This is exactly the type of pay discrimination that the equal pay legislation was intended to address.
“When you have female dominated jobs being paid less than male dominated jobs and the work is equal, employers cannot pay women less simply by pointing to the market and saying – it is the going rate for the jobs. We knew that already.
“The employment tribunal has confirmed employers must go further to justify paying the different rates. They rightly found that Next could have afforded to pay a higher rate but chose not to and that the reason for that was purely financial. Helen and thousands of her colleagues had the courage and perseverance to bring these claims and see them through to a successful end. I am so pleased for them.
“It is worth reminding people that the financial compensation they will now be entitled to is not a windfall. It is pay that they were always entitled to if Next had complied with its equal pay obligations.”
Appeal plans
In response to the judgment, Next said: “The employment tribunal rejected the majority of the claims made by the claimants, in particular all claims of direct discrimination, and all aspects of the claims made in respect of bonus pay.
“The tribunal expressed serious criticisms of the claimants’ expert evidence, and overwhelmingly accepted the evidence of Next’s expert and fact witnesses.”
The employer said that in respect of the specific terms in which the claim succeeded, “it is our intention to appeal”.
Next’s statement continued: “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 company has shared a copy of the tribunal judgment on its corporate website.
Earlier claims hearing
In 2023 the work done by the women in the Next stores was ruled to be equal to the warehouse operative work. Under equal pay law, work of equal value must be paid equally unless an employer can show that the difference in pay is explained by a reason that is not sex discrimination.
At a hearing in May 2024, Next argued that market forces explained the pay difference. They said that the market rate for a warehouse operative is more than for a sales consultant and that the sex of staff did not come into it. However, the tribunal rejected this.
The tribunal found that when there are two labour markets doing equal work, but the mainly male market (warehousing) is paid more than the mainly female market (the stores) because these are the market rates, that reason alone is not a lawful defence to an equal pay claim. The ruling found that there has to be something more to justify the inequality.
