Britain’s supermarkets face an anxious wait after fashion retailer Next lost a major legal battle today over unequal pay in its UK operations.
The Employment Tribunal ruled that the company had failed to show 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.
Next had argued that the market wage for a warehouse operative was greater than for a sales consultant and gender did not come into it.
But the Tribunal ruled that when there are two labour markets doing equal work but the male-dominated market is paid more than the female-dominated market because of differences in the market rate, that reason alone is not a lawful defence in an equal pay claim.
As a result, Next could be forced to pay out as much as £30m, according to law firm Leigh Day, which brought the claim against Next on behalf of 3,500 current and former staff. The firm added, however, that it was continuing to submit new claims for sales consultants who were not in the original case, adding that “the number of claims are expected to increase significantly over the coming weeks and months following the successful ruling”.
While Next has said it will appeal the ruling, the decision is likely to rattle the UK’s biggest supermarkets, which are also facing similar claims.
Leigh Day has also filed equal pay claims against Asda, Tesco, Sainsbury’s, Morrisons and Co-op, on behalf of a total of 112,000 staff.
Commenting on the decision, Elizabeth George, a Leigh Day partner and barrister representing the successful claimants, said: “This is exactly the type of pay discrimination that the equal pay legislation was intended to address.
“The Employment Tribunal has confirmed employers must go further to justify paying the different rates. They rightly found that Next could have afforded to pay a higher rate but chose not to and that the reason for that was purely financial.”
However, Next highlighted that the ruling also rejected many of the claimants’ arguments.
“The Tribunal rejected the majority of the claims made by the claimants, in particular all claims of direct discrimination, and all aspects of the claims made in respect of bonus pay,” a spokesperson for Next said.
The spokesperson said that “in respect of the specific terms in which the claim succeeded, it is our intention to appeal”.
“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,” the spokesperson said.
Next’s share price was down by almost one per cent on Tuesday afternoon.