Employment Appeal Tribunal rules market pressures can justify pay gaps, reshaping equal pay claims across UK retail
The UK's Employment Appeal Tribunal (EAT) ruled Monday that Next was justified in paying warehouse staff more than shop-floor workers, overturning part of a 2024 equal pay ruling. The decision affects an ongoing legal dispute involving thousands of current and former Next employees, with several related pay issues still unresolved.
The EAT found that Next could rely on recruitment and retention pressures specific to warehouse roles to justify paying those workers a higher basic rate than store staff. The tribunal ruled that the original decision had erred in finding Next lacked a legitimate aim when setting different pay rates. The case covered the period from 2012 to 2023, during which women made up almost 78% of retail sales roles and men made up about 53% of warehouse roles.
Wider implications for the retail sector
The ruling's reasoning extends beyond Next. The EAT held that it can be justifiable for an employer to rely on market forces to pay one group more than another, where there is a demonstrable rationale for doing so.
Leigh Day, the law firm representing Next's claimants, has also filed equal pay claims against Asda, Tesco, Sainsbury's, Morrisons and Co-op on behalf of more than 112,000 store staff. Those retailers are facing similar claims and are expected to review the ruling's reasoning, according to trade reporting.
Next described the decision as a "landmark victory," stating that an unfavorable outcome "would have represented a hammer blow to retail employment in the UK." The dispute originated in a 2024 ruling in which more than 3,500 current and former Next staff succeeded in a six-year case over pay differences between predominantly female sales staff and a predominantly male warehouse workforce. The total number of claimants has since grown to more than 6,400. During the period examined, warehouse staff earned between 38p and £3.13 more per hour than retail sales staff.
Other pay findings unchanged
The EAT's ruling did not resolve every disputed pay element. It upheld earlier findings that Next had not justified lower rates of night-time pay, overtime pay, or its failure to provide paid rest breaks to store workers. The tribunal also declined to accept Next's argument on Sunday premium pay, sending that issue back to the employment tribunal for further consideration. Next said it intends to seek permission to appeal these remaining findings to the Court of Appeal.
Leigh Day separately said it intends to appeal the basic pay finding, the part of the ruling decided in Next's favor; its public statements do not specify which court it will petition. Leigh Day has previously estimated Next's potential liability at more than £30m in back pay.
Elizabeth George, a partner at Leigh Day representing the claimants, said the tribunal had rejected Next's argument that its pay practices did not disadvantage women. On the basic pay finding, George said allowing market-rate evidence alone to justify a pay gap risked circularity, stating that the conditions producing the disparity could then be used to justify it.
Both the original tribunal and the EAT found no direct sex discrimination in Next's pay-setting practices, leaving the dispute focused on whether the pay structure was indirectly discriminatory and how it should be justified.
What comes next
Next and Leigh Day are each pursuing separate appeals covering different aspects of the ruling, and more than 112,000 workers are involved in parallel claims against other major UK retailers. The outcome of those cases, and of the remaining Next appeals, will determine how far the EAT's reasoning on market-based pay justification extends across the sector.
