- Employment tribunal ruled Next must pay the same to store and warehouse staff
- Next’s store workforce is mostly female and predominantly male in warehouses
- The retailer has lodged an appeal against the decision would could cost £30m
Major high street giant Next has said it could be forced to close stores after it lost a £30m landmark legal battle over equal pay.
The fashion retailer issued the warning after an employment tribunal ruled last month that Next should pay its store staff, who are predominantly women, the same hourly rates as its mostly male warehouse workers.
Bosses told investors on Thursday the ruling will affect Next’s ability to make stores ‘individually profitable’ and could lead to store closures.
Next could have to pay more than £30m to settle the claim, which was first lodged in 2018 and includes more than 3,500 current and former shop workers.
The retailer has around 500 stores in UK and Ireland, as well as another 206 franchised stores in 33 other countries.
Major high street giant Next has said it could be forced to close stores after it lost a £30m landmark legal battle over equal pay
Bosses told investors on Thursday the ruling will affect Next’s ability to make stores ‘individually profitable’ and could lead to store closures
Lawyers at legal firm Leigh Day believe more than £30million could be owed in back-pay, but Next has confirmed it will appeal against the decision.
They said the difference between shop and warehouse staff’s hourly rates ranges from 40p to £3 and an average salary loss is more than £6,000 per person.
Next laid out the potential impact of the ruling in its half-year results on Thursday, stating: ‘Inevitably some of our stores will no longer be viable if this ruling is upheld on appeal.
‘Materially increasing store operating costs will result in more shops being closed when their leases expire, and will materially impede our ability to open new stores going forward’, according to The Telegraph.
The company also warned that the case could have ripple effects across its warehouses, where it will be unable to raise wages without doing so in stores.
The comments came as the company published figures which showed its revenues in the first six months of the year were up 13.6 per cent to hit £2.9bn while profits rose 3.9 per cent to £432m.
The strong financials led to Next shares rising by 6 per cent in early trading today.
Last month the tribunal rejected Next’s defence that warehouse pay rates were higher than on the shop floor due to wage levels in the wider job market.
However, the tribunal did rule there was no evidence of ‘direct discrimination’ towards women.
Instead, the ruling says the pay discrepancy was down to Next wanting to ‘reduce cost and enhance profit’.
It said the ‘business need was not sufficiently great as to overcome the discriminatory effect of lower basic pay’.
Between 2012 and 2023, around 77.5 per cent of retail workers at Next were women while 52.75 per cent of warehouse operators were men.
Next could have to pay more than £30m to settle the claim, which was first lodged in 2018 and includes more than 3,500 current and former shop workers
Next, which is run by Tory peer Lord Wolfson (pictured), says it will appeal the decision
Former and current staff are hopeful now they will be paid thousands of pounds of compensation.
Helen Scarsbrook, 68, was one of the three laid claimants in the case and has worked for Next for more than 20 years.
Celebrating the victory last month, she said: ‘We did it! It has been a long six years battling for the equal pay we all felt we rightly deserved but today we can say we won.’
Elizabeth George, Leigh Day partner and barrister representing the successful claimants, added: ‘When you have female dominated jobs being paid less than male dominated jobs and the work is equal, employers cannot pay women less simply by pointing to the market and saying, “It is the going rate for the jobs”. We knew that already.
‘It is worth reminding people that the financial compensation they will now be entitled to is not a windfall.
‘It is pay that they were always entitled to if Next had complied with its equal pay obligations.’
A spokesman for Next said: ‘This is 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.’
Five supermarket giants — Asda, Tesco, Morrisons, Sainsbury’s and the Co-op — are also facing equal pay cases.
Tesco is also facing a similar equal pay case – with 50,000 store workers claiming they are unfairly paid compared with their warehouse stablemates
And in these cases, the retailers also argue pay is set based on market rates.
Britain’s largest grocer Tesco is the subject of legal action involving nearly 50,000 workers.
Shop workers, who are mostly women, claim they have been paid unfairly as they were paid up to £3 less per hour than distribution centre workers, who are mostly men.
Their lawyers claim the potential pay-put could top a staggering £4billion.
A Tesco spokesman said: ‘The jobs in our stores and distribution centres are different.
‘These roles require different skills and demands which lead to variations in pay – but this has absolutely nothing to do with gender.
‘We continue to strongly defend these claims.’