Retail giant Next has won an equal pay appeal allowing it to pay warehouse workers more than shop-floor staff, warning that a 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.

The case dates back to August 2024, when more than 3,500 current and former Next staff won a six-year legal fight against the retailer. A damning Employment Tribunal ruling found Next had failed to show that paying its sales consultants — most of whom are women — lower hourly rates than staff in its male-dominated warehouses was not sex discrimination. Leigh Day, the law firm acting for the claimants, said Next could have been forced to pay out as much as £30m.

The claims were brought under the UK's equal pay framework, which stems from the Equal Pay Act 1970 and is now contained in the Equality Act 2010, allowing workers to compare their pay with colleagues in different jobs of equal value. The Next case is one strand of a wave of supermarket and retail equal pay litigation that has run through the UK courts for the better part of a decade.

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

The retailer 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

Responding to the EAT ruling, Leigh Day described it as a "mixed ruling", noting that the findings that store workers performed work of equal value to warehouse operatives but were paid less remain legally binding.

Leigh Day pointed out that Next did not appeal the original finding that store workers perform work of "equal value", and said the EAT rejected Next's arguments that its pay practices did not disadvantage women.

The EAT also upheld the original Tribunal's findings that Next failed to justify lower rates of night-time pay and overtime pay, as well as its failure to provide paid rest breaks to store workers — findings 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 appeal sets up a potential further round of litigation, and its reasoning on market-rate justifications is likely to be watched closely given the scale of comparable claims elsewhere in the sector. Leigh Day has also filed equal pay claims against Asda, Tesco, Sainsbury's, Morrisons and Co-op on behalf of more than 100,000 staff.

Source: City AM