Next has won an appeal allowing it to keep paying warehouse workers a higher hourly rate than shop floor staff in a long running battle over equal pay.

The Employment Appeal Tribunal has overturned a key part of a landmark ruling in 2024 which found the retailer was wrong to pay its warehouse staff higher basic pay than shop floor workers for jobs of equal value.

More than 3,500 current and former employees, mainly women, had been set to share potentially more than £30m in back pay as a result of that judgement.

After Next’s appeal, the law firm Leigh Day, which represents store workers, described the conclusion on basic pay as “disappointing” and said it will appeal the decision.

The tribunal accepted that Next was justified in paying higher rates because of recruitment and retention pressures for warehouse workers.

Next described the decision as a “landmark victory” succeeding on the “key issue of basic pay”.

In a statement, it said: “The importance of this decision is that the Appeal Tribunal has confirmed that it was justifiable for Next to rely on market forces to distinguish between different groups of employees, where there was a good rationale to pay one group more than the other.

“In this case, Next had to pay a higher market rate to warehouse operatives because of recruitment and retention pressures, which did not apply to the workforce in its stores. Next believes this element of the judgment is not only correct in law, but also a victory for common sense.

“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.”

Leigh Day said judges did uphold 2024 findings on night-time premiums, overtime premiums and paid rest breaks.

Next said it will now seek permission to appeal these decisions.

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

Questions are now being asked about if this result could set a precedent across the industry. Tesco, Asda, Morrisons, and Sainbury’s are all involved in similar long running claims and will be studying the findings closely.

Last year, thousands of female workers at Birmingham City Council heard how much money they will receive in a long-awaited equal pay settlement. Brighton and Hove City Council is also facing over 1,000 equal pay cases.