Next Equal Pay Claim Case: Over 3,500 Store Workers Succeed in Six-Year Legal Battle

The Employment Tribunal recently examined the practice of paying warehouse staff at a higher rate than their shop floor sales colleagues in a first-class action case brought against Next by over 3,500 workers.

An employee is entitled to contractual terms as favourable as those of someone of the opposite sex carrying out equal work for the same employer.

As an employer, you can defend an equal pay claim by showing that the difference in terms is due to a ‘material factor’ other than gender.

This article examines the legal framework around equal pay and how the outcome of Thandi and others v Next Retail Limited and Next Distribution Limited sets the precedence for how future tribunals will approach equal pay claims.

Background to the Case

Over 3,500 shop-floor sales workers brought claims for equal pay against Next, representing one of the largest equal pay group action in the private sector.

The predominantly female claimants contended that paying them less than their predominantly male warehouse colleagues was a breach of equal pay law, and that the work was of equal value.

In an earlier hearing, the Employment Tribunal found that the claimants carried out work of equal value to the warehouse staff for the purposes of equal pay legislation. The case therefore was required to consider whether any material factor defence would apply.

What Are Material Factor Defences?

A material factor defence is a method of demonstrating a legitimate and non-discriminatory business reason to justify pay differences. The defence must my objectively justified and not a result of gender bias.

As part of a material factor defence, a tribunal would consider whether:

• The aim of the pay difference is legitimate
• The means to achieve the aim is proportionate
• There is no indirect discrimination in the factor relied upon in the defence

The employer must ensure that any pay differences do not disproportionately impact one gender, even if this impact is indirect. An example of this might be higher hourly pay rates for more hours worked in a week, which could indirectly discriminate against women who are more likely to be part-time due to caring duties.

Employment Tribunal

Next advanced “material factors” in defence of the claims including: market forces and market price, difficulty in recruiting and sustaining sufficient warehouse staff, incentivising work in the warehouse, and the viability, resilience, and performance of the Next group.

Although this argument was successful on ten of the claimants’ contractual terms, Next failed to establish the defence on seven terms in their contracts of employment, including that of basic pay, paid rest breaks, and long-service awards.

The Employment Tribunal considered whether the material factors advanced were indirectly discriminatory.

There was a disproportionate adverse impact on women. The case pivoted on whether the factors advanced justified as a “proportionate means of achieving a legitimate aim”.

The Employment Tribunal thought not, finding that the factors advanced were purely a cost-saving measure. This was therefore not permitted as a legitimate defence. Had the aims been legitimate, paying different sums of basic pay to warehouse and retail staff was not a proportionate means of achieving those aims. The business need was insufficient to overcome the discriminatory effect of the lower basic pay.

With average individual losses of around £6,000, Next’s payout is expected to surpass £30 million. However, Next appealed the decision, with a preliminary hearing taking place in May 2025 and further developments expected some time in 2026.

Why This Case Ruling Matters for Employers

Whilst the outcome of Next’s appeal is yet to be known, the case sets strong signals about how tribunals may approach such equal pay claims.

• Market rates alone may not justify pay disparities, especially where they reflect historic gender biases in the labour market.
• Employers must be wary of relying on cost-saving as a predominant rationale.
• Gender composition statistics of different workforce groups may be central to establishing indirect discrimination.
• Even where work is different in content, roles can still be treated as work of equal value under UK law.

Next is of course not the only case to stay abreast of. Read more about Asda’s equal pay claim here.

What Can Employers Do To Mitigate Equal Pay Claim Risk?

1. Conduct a comprehensive equal pay audit across job types and locations.
2. Benchmark roles cautiously, ensuring that market comparisons do not mirror structural gender imbalances.
3. Document material factors carefully, tying them to legitimate, non-discriminatory business aims.
4. Review pay and benefit policies regularly to ensure consistency with equal pay principles.

A proactive approach can help you identify potential issues before they crystallise into costly tribunal claims.

Comment

Equal pay claims are challenging to defend and can be costly, including your time, legal costs,  and compensation.  It is, therefore, not surprising that Next has confirmed that it will appeal this decision.

Although not binding on future tribunals, the decision in this case could impact other employers unless overturned.

Employment tribunals will carefully examine your reasoning for differentials in pay.  Take care to document your reasons, ensuring they are not just about saving you money!

Read more about equal pay in general with our handy guide.

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