Employment Appeal Tribunal allows Next’s appeal against equal pay claims

About this case:

• Citation:
  [2026] EAT 130
• Judgment:
  External link
• Court:
  Employment Appeal Tribunal
• Judge:
  Mr Justice Bourne

Equal pay claims brought by several thousand Next sales consultants were upheld by the Leeds employment tribunal in 2024. Next challenged that decision before the Employment Appeal Tribunal.

The appeal was heard by Bourne J, with Patrick Green KC, Kathleen Donnelly KC, Chloe Campbell and Thomas Mallon appearing for the appellants and Andrew Short KC and Gus Baker for the respondent.

‘Completely different rationale’ for warehouse staff pay

In 2018, over 3,500 sales consultants working for the high street retailer Next brought claims under the equal pay provisions of the Equality Act 2010. They alleged that, despite performing work of equal value, they were paid less than their chosen comparators – operatives working in Next’s warehouses – on account of their female sex. 

After confirming the lead claimants’ submission that their work was of equal value to their comparators, the Leeds employment tribunal examined Next’s defence to the claims under section 69 of the 2010 Act: namely, that the difference in terms was justifiable on account of a range of material factors and constituted a proportionate means of achieving a legitimate aim.

The tribunal noted a difference of £0.92 per hour in the basic rate of pay of sales consultants (who were 77.5 per cent female) and warehouse operatives (52.8 per cent male). That difference, it observed, was explained by three of Next’s quoted factors: market forces, the need to recruit and retain sufficient warehouse labour, and matters concerning the viability in general of Next’s business. Although accepting Next’s denial of direct discrimination, the tribunal rejected the proposition that the retailer could rely on market forces as a “trump card” to justify indirect discrimination and allowed the claim as regards basic pay.

Bringing some 16 grounds of appeal before the Employment Appeal Tribunal, Next argued that the tribunal had been wrong to find that it should have paid retail sales consultants the same basic pay as warehouse operatives. There was a “completely different rationale” which justified paying warehouse operatives more, Next argued, and the mere fact that it could have afforded to pay sales consultants more did not mean that it was obliged to do so.

Recruitment and retention, not gender

Addressing Next’s submission that the tribunal had erred in finding that the difference in treatment was not justified by a legitimate aim, Bourne J observed: “It seems to me that this case illustrates a potential difficulty which is liable to arise when section 69 is applied in practice … The potential difficulty is caused by tribunals (and the parties in their pleadings) having to distinguish between factors, aims and reliance on factors, treating those things as separate entities and subjecting them to separate tests, when in many cases the factors, aims and reliance will all just amount to one thing, namely the employer’s reason for having different terms for different employees. That in my view is reflected by the comment in Heskett [v Secretary of State for Justice (2011)] about the need for a ‘fair characterisation of the employer’s aim taken as a whole’. In the present case at least, it was necessary to consider the ‘aims’ and the ‘factors’ together.”

He continued: “[I]t is inescapable that Next’s aim in setting the warehouse rates, fairly characterised as a whole, encompassed the need to recruit and retain sufficient staff to maintain the warehouse service … On the ET’s findings of fact, Next needed to pay the higher market rate for warehouse work, not because of gender but because of recruitment and retention factors. That rationale did not apply to the retail workers. So as in [Redcar and Cleveland Borough Council v] Bainbridge [(2008)], whilst it ‘might be said’ that the employer’s aim in not evening up the pay of the disadvantaged group was to save the cost of having to do so, ‘that was not the whole story’ … [W]hilst financial considerations will be relevant in the analysis of proportionality at the next stage, the employer’s aim of allocating its resources is not rendered illegitimate by the fact (if proved) that it could have afforded to allocate them differently.”

Turning to the issue of proportionality, Bourne J noted: “I make the general observation that the brevity of the ET’s analysis in paragraph 270 of the judgment makes the appeal against the proportionality ruling more difficult for the claimants to resist. All of the emphasis in the ET’s decision was on the finding as to legitimate aim and, as a result, there is only the briefest analysis of proportionality … On one view that brevity could make it harder for this Tribunal to carry out the necessary careful scrutiny of the ET’s decision. On another, it could mean that that careful scrutiny may itself be briefer or more briefly expressed.”

He concluded: “[I]t seems to me that ‘trump card’ was not a fair characterisation of Next’s case. This was not a case where warehouse workers were paid more simply because warehouse workers tend to be paid more. That sort of application of market factors no doubt could cause discriminatory practices to be embedded. But paying more to warehouse workers for recruitment and retention reasons … was different. It might coincidentally help to preserve higher levels of pay in a sector which at one time had been male-dominated, but the point is that that was not all that it was doing. And the fact (if it was a fact) that Next could have afforded to equalise the pay of the retail workers did not, in my judgment, mean that the business need for the higher pay was not sufficiently great to outweigh its discriminatory effect.”

The appeal was accordingly allowed, with further submissions invited on disposal.