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Next has won an appeal against a 2024 employment tribunal ruling that its mostly female shop-floor staff suffered sex discrimination because the retailer paid its warehouse workers a higher hourly rate. The Employment Appeal Tribunal has found that the difference was justified by the need to recruit and retain warehouse staff.
The judgment, handed down by Mr Justice Bourne, reverses a decision won by more than 3,500 current and former Next employees, represented by the law firm Leigh Day, at an employment tribunal in August 2024, in a ruling Business Matters reported at the time could leave the retailer facing compensation costs of more than £30m.
Next described the outcome as a “victory for common sense” and said it would seek permission to take the outstanding issues in the case, including overtime, night pay and paid rest breaks, to the Court of Appeal. Leigh Day said it also intends to appeal.
Shop staff at Next are mostly women, while the gender split among its warehouse workers is more even, and lawyers for the store workers argued that the gap in pay between the two groups amounted to a form of sex discrimination.
In his judgment, Mr Justice Bourne said the average gender split of retail workers was 77.5 per cent female and 22.5 per cent male, while in warehouses it was about 47 per cent female and 53 per cent male.
“Next paid a higher market rate for warehouse work because of recruitment and retention factors which did not apply to the retail workers. Therefore, this was not a case of simply paying more for what was perceived by the market as typically men’s work,” he said.
He added: “Next paid the rates to warehouse staff which it needed to pay for sound business reasons, and no more, and those business reasons did not apply to the retail staff.”
Asda, Sainsbury’s and Tesco are at varying stages of similar litigation brought on behalf of shop-floor workers, with the risk of multibillion-pound compensation bills. Leigh Day has claimed that the final bill for Tesco could be as much as £4bn, while Tesco, Britain’s largest supermarket, has put the figure at £1.7bn.
Next, whose shares were broadly level after the announcement, said in a statement that the judgment “affirms a principle at the heart of any effective employment market, that employers must be able to pay what is necessary to recruit the people they need, and that doing so does not oblige them to raise the pay of other employees where there is no reason to do so”.
The retailer said an unfavourable ruling would have had the “perverse effect of putting retailers who operate their own warehousing at a material disadvantage to competitors who contract out their warehouse operations, which makes no sense”.
The FTSE 100 clothing and homeware chain, which employs more than 20,000 store staff across 458 stores in the UK and Ireland, warned that it may have been forced to close stores if the ruling had gone the other way. It said that if its appeal had failed, it would have represented a “hammer blow to retail employment in the UK”.
Next said the judgment came “at the right time” for the British economy amid concerns about unemployment and the implications of higher labour costs and new workers’ rights legislation, and claimed to have won the “vast majority” of the litigation.
Elizabeth George, a partner at Leigh Day, said: “I am pleased that the Employment Appeal Tribunal rejected Next’s arguments that its pay practices do not disadvantage women. They plainly do, and the appeal tribunal firmly recognised that.” She said the conclusion on basic pay was “disappointing”.
She added: “While the store staff and their legal team welcome many aspects of this appeal judgment, we respectfully disagree with this approach to justification. We remain confident in our clients’ position and intend to appeal.”
