The Employment Appeal Tribunal (EAT) has handed down a significant judgment in the long running Next equal pay litigation, providing important guidance on when employers can rely on labour market pressures to justify pay differences between roles that have already been found to be of equal value.
This is an important moment in equal pay litigation. It gives employers more confidence that genuine labour market pressures can justify differences in basic pay, but the wider litigation is far from over.
Background
The claims were brought by thousands of predominantly female shop workers who argued that they were paid less than warehouse operatives, despite the roles having been assessed as being of equal value. The original Employment Tribunal ruled in favour of the claimants in 2024, finding that Next had failed to justify the difference in pay.
What has the EAT decided?
The EAT has overturned the most significant aspect of that ruling, finding that Next was entitled to pay warehouse staff higher basic hourly rates because of recruitment and retention pressures in the warehouse labour market. The Tribunal held that these were legitimate business reasons for the pay differential and that Next did not need to justify why it had not increased shop workers' pay to the same level.
In practical terms, the judgment confirms that employers may, in some circumstances, rely on market forces to justify higher rates of basic pay for one group of workers where there is a genuine business need to do so.
What’s next
Although Next succeeded on the issue of basic pay, the EAT rejected several other grounds of appeal. Findings against Next in relation to night shift premiums, overtime premiums and paid rest breaks remain in place. The issue of Sunday premium pay has also not been finally resolved and will return to the Employment Tribunal for further consideration.
Both parties are expected to pursue further appeals. Claimant representatives have already indicated that they intend to challenge the EAT's conclusions on basic pay, while Next has said it plans to seek permission to appeal aspects of the remaining findings against it.
Implications for employers facing equal pay claims
For employers, the judgment is encouraging. It shows that recruitment and retention pressures can be a valid explanation for pay differences.
If you'd like support on any aspects of equal pay litigation, please contact our expert employment law solicitors.
