Equal Pay Ruling Against Next:
What It Means for Employers in Retail and Beyond
A recent decision by the Employment Tribunal (ET) has found that store workers at Next were unlawfully paid less than warehouse workers, despite doing work of equal value. The ruling, which could cost the company up to £30 million in back pay, is a landmark moment in ongoing equal pay litigation within the retail sector—and has significant implications for other employers with gendered workforces and pay differentials.
While the decision currently only applies to Next, it sets out principles that all employers—particularly those in retail, logistics, and hospitality—should now review carefully.
The Background: Retail vs Warehouse Pay
The claim was brought by a group of mainly female retail workers who argued that their roles as in-store sales consultants were of equal value to those of predominantly male warehouse operatives, yet were paid less. After a lengthy process spanning six years, the ET concluded that:
The roles were of equal value, and
Many of the differences in pay could not be justified by the employer.
The case was based on the Equality Act 2010, which requires that men and women performing equal work must receive equal pay—unless the employer can prove a material, non-discriminatory reason for the difference.
What the Tribunal Found
What Was Not Justified:
The ET held that basic pay differentials, as well as some bonuses and premiums, could not be justified because the reasons given boiled down to cost-saving or market-based explanations, such as:
Market forces and retention strategies
Benchmarking against male-dominated warehouse roles
Differentials in Sunday, overtime, and night premiums
Withdrawal of rest breaks and long service awards
The tribunal concluded that cost alone is not a legitimate justification for unequal pay. Employers must show that any pay difference serves a legitimate aim and is proportionate—not simply convenient or historically embedded.
What Was Justified:
Some payments were upheld by the tribunal, including:
Productivity bonuses linked to measurable warehouse output
Short-term premiums introduced to avoid losing staff to competitors
Attendance and public holiday bonuses tied to specific business needs
These were found to be proportionate and clearly linked to distinct operational requirements that didn’t apply equally to the retail workforce.
Practical Lessons for Employers
This case provides several important takeaways for employers, especially those with different pay structures across job categories:
Beware of market benchmarking that reinforces historic inequalities
Pay rates based solely on external comparisons—especially where those roles are male-dominated—may be inherently discriminatory if not reassessed.Cost-saving alone is not enough
A justification based purely on financial constraints will likely fall short unless combined with other legitimate business objectives.Focus on role-specific business needs
Pay differentials tied to clear, time-limited, or location-specific business needs are more likely to withstand legal scrutiny.Equal value ≠ identical work
Even if roles differ day-to-day, if they require similar effort, skill, and responsibility, they may be deemed equal for pay purposes.Get your documentation in order
The strength of your defence will depend on how clearly you can show the rationale behind pay decisions—including evidence of how they were made and reviewed.
Employer FAQs: Equal Pay Claims After the Next Decision
Q: Does this mean all retailers must now equalise store and warehouse pay?
A: Not necessarily. This decision applies only to Next and is based on its specific circumstances. However, it may encourage more claims—and tribunals will be influenced by the logic in this case.
Q: Can we use market rates to justify pay differences?
A: Only with caution. If market rates reflect historic gender imbalances, they may be considered indirectly discriminatory. Justifying pay with market data requires a robust, evidence-based rationale beyond just “that’s what the market pays.”
Q: Is cost-saving ever a valid defence in equal pay cases?
A: Cost can be a factor, but not the sole reason. You’ll need to demonstrate that the differential is part of a broader, legitimate business objective, and that it’s proportionate.
Q: What if the pay gap is closing due to National Living Wage increases?
A: While pay convergence may reduce risk going forward, past discrepancies can still lead to substantial back pay liability if the work was of equal value and not fairly remunerated.
Q: Should we conduct a pay audit?
A: Yes. If you have role-based pay structures with significant gender imbalances, a proactive equal pay audit could help identify risks and reduce the likelihood of legal action.
Final Thoughts
The Next decision, although under appeal, sends a clear message: employers must be prepared to justify pay differences with more than vague references to cost or the market. With other large retailers already facing similar claims, this case may be the first of many to reach a conclusion—and potentially reshape pay policies across sectors.
If your organisation operates multiple pay structures or has legacy pay disparities between different functions, now is the time to act. Our team can support you with pay audits, equal pay risk assessments, and guidance on implementing compliant, fair pay structures that stand up to scrutiny.