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Thousands of store staff at the retailer Next have won a six-year fight for equal pay in a tribunal ruling that will be closely watched by UK supermarkets facing similar legal challenges.
The Employment Tribunal on Tuesday said Next had not given sufficient justification for paying its retail consultants, who were mostly women, at lower rates than staff in warehouses, where the gender split was more even.
The ruling means that more than 3,500 current and former staff will be eligible for back pay that could total more than £30mn, on the estimate of Leigh Day, the law firm representing them. The workers will also be entitled to automatic equalisation in existing contracts of basic hourly pay, paid rest breaks and Sunday, night and overtime premiums.
A further 18,000 people could potentially join the claim, Leigh Day said. But the implications of the ruling could be much wider, with supermarkets Tesco, J Sainsbury, Asda, Wm Morrison and Co-op all fighting similar claims that they have discriminated against female store staff paid less than warehouse workers.
“The decision is really encouraging,” said Paula Lee, partner at Leigh Day leading a claim against Tesco, the UK’s largest supermarket, which could potentially be joined by up to 250,000 people.
However, she noted that the tribunal’s ruling only concerned Next and did not set a precedent, with other cases to be decided on their own facts.
Next said it planned to appeal against the ruling, noting it was “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 FTSE 100 company underlined that the judges had rejected all claims of direct discrimination — where an employer offers some staff worse terms specifically because of their sex — and had only partly accepted the claims of indirect discrimination, upholding Next’s defence of some of its bonus arrangements.
But Jo Keddie, head of employment at law firm Forsters, said Next might struggle to find grounds to appeal against a “very significant” judgment. Retailers facing similar class actions would be “paying very close attention”, she added, especially given the new Labour government’s pledge to extend equal pay protections to ethnic minority and disabled workers.
The claims against supermarkets are mostly at an earlier legal stage, with the tribunal yet to determine whether store and warehouse staff do work of equal value — a benchmarking process Lee compared to the card game Top Trumps, with independent experts assessing the skills, experience, physical and emotional effort associated with different roles.
An earlier ruling last year determined that Next’s store and warehouse staff did do work of equal value, placing the onus on the retailer to prove its pay arrangements did not constitute sex discrimination.
One of Next’s main arguments was that it paid staff in both groups the going “market rate” in a cost-constrained context where it was much harder to recruit and retain warehouse workers.
But the tribunal said the company did not have a strong enough business need to justify the indirect discrimination. Using market forces as a “trump card” in this way would “defeat the objective” of equal pay legislation, the ruling said, as “lower pay in particular sectors due to indirectly discriminatory practices could then be lawfully sustained in perpetuity”.
Leigh Day said the ruling confirmed that employers “cannot pay women less simply by pointing to the market and saying it is the going rate for the jobs” and must go further to justify different pay rates.
