Retail giant Next has won an equal pay appeal allowing it to pay warehouse workers more than shop-floor staff, warning that its defeat “would have represented a hammer blow to retail employment in the UK”.

The FTSE 100 retailer told shareholders on Monday that it was justified in paying its warehouse operatives a higher rate after the Employment Appeal Tribunal (EAT) ruled in its favour, citing recruitment and retention pressures that do not apply to sales workers.

In August 2024, more than 3,500 current and former Next staff won a six-year legal fight against the retailer after a damning ruling by the Employment Tribunal had failed to show that paying its sales consultants, most of whom are women, lower hourly pay rates than staff in its warehouses, which are male-dominated, was not sex discrimination.

Law firm Leigh Day, acting for the claimants, said Next could be forced to pay out as much as £30m.

The retailer said the EAT ruled that it is legally justifiable for Next to pay warehouse operatives a higher basic rate than store assistants and it dismissed the claimants’ cross-appeal on this issue.

Next told shareholders the successful appeal “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.”

“This judgment has come at the right time, the UK economy desperately needs jobs and the loss of this appeal would have represented a hammer blow to retail employment in the UK,” the group added.

Claimant law firm seeks appeal

In a statement on the EAT ruling, Leigh Day called it a “mixed ruling”, saying the findings that store workers performed work of equal value to warehouse operatives but were paid less remained legally binding.

Leigh Day noted that Next did not appeal the original finding that store workers perform work of “equal value” and added that the EAT rejected Next’s arguments that its pay practices did not disadvantage women.

The EAT upheld the original Tribunal’s findings that Next failed to justify lower rates of night-time pay, overtime pay, and the failure to provide paid rest breaks to store workers, which is what Next said in its statement it intends to seek permission to appeal.

Elizabeth George, a partner at Leigh Day, welcomed the EAT’s firm recognition that Next’s practices disadvantaged women but called the conclusion on basic pay “disappointing.”

“If an employer need only show it pays the market rates to justify pay discrimination, the very market conditions that give rise to the discrimination then become the legal justification,” George said, confirming the claimants intend to appeal the basic pay decision.

The claimant law firm has also filed equal pay claims against Asda, Tesco, Sainsbury’s, Morrisons and Co-op, on behalf of over 100,000 staff.