Next staff win Equal Pay claim

Broadly, employees doing the same work are entitled to the same pay and contractual terms across the board as those of a comparator in the same employment. The starting point is looking at whether the work is either: like work, work rated as equivalent or work of equal value. If the pay or terms aren’t the same for workers doing the same work, an employer may have a defence, provided that defence is not the difference in the sex of those groups of workers being compared and so discriminatory.

Essentially there was a higher proportion of men in the Next warehouses (52.78%) earning a higher rate of pay to those on the shop floor (77.5% women). Additionally, the warehouse labour market across the board was also predominantly male and Next sought to benchmark salaries for the warehouse staff against the market.

In this case, it was found by an Employment Tribunal in 2023 that the claimants were carrying out work of equal value to the warehouse staff. The next stage was to determine if there was a defence for this mismatch in contractual terms including pay. This stage of the proceedings took place earlier this year and has just been reported on.

Some of the defences Next raised for the difference in pay between the warehouse staff and shop floor staff were market forces and market price, difficulty recruiting and sustaining warehouse staff, maintaining 24/7 coverage and the performance of the Next group.

At first level the Tribunal held that there had been a breach of equal pay provisions under the Equality Act 2010 in respect of 7 of the 17 terms alleged to be in equal, including basic pay. Note that this decision is not binding on future Tribunals.

Where work is of equal value and the pay is not the same and there is no defence, there is a breach of the equal pay laws. The payment of less basic pay here disproportionately impacted women. This was a case of indirect discrimination, not direct discrimination.

There was no legitimate aim for this action - maximizing profitability is not on its own a legitimate aim justifying the adverse impact on women. Next could have increased the basic pay to shop floor staff. Its business need was not sufficiently great to justify its actions.

The Tribunal reached the same conclusion in respect of night time premiums, Sunday working premiums, long service awards and paid rest breaks ie equal pay provisions were breached. There was indirect discrimination that could not be justified.

However in respect of other payments that were only available to Next warehouse staff, this was objectively justified by Next given it had been facing challenges retaining warehouse staff and ensuring they covered anti-social shifts. This was not the case for shop floor staff. These payments included attendance bonuses and premiums for bank holiday working. Therefore there had not been a breach of the equal pay laws in respect of the remainder of the payments raised by the claimants.

Ultimately, this decision could lead to a big compensation bill for Next however it has confirmed it will be appealing the judgment. So it is early days. We watch this space.

Meanwhile, other organisations are also facing equal pay actions by staff including the long running case brought by retail workers at Tesco. Likewise here, the awards could be significant if the claimants win their case in the final determination.

If you're facing a workplace challenge and require legal advice, our expert employment team is here to help. Call us on 020 8290 0440.