UK: Equal Pay Claims: Work of Equal Value

Authors: Graham Mitchell, Corinna Harris & Sophie Jackson

A group of over 3,500 retail sales consultants at Next Retail Plc (Next) brought an equal pay claim arguing that their work was of equal value to the work done by Next’s warehouse operatives, who were mostly male. At an Employment Tribunal hearing, the sales consultants, who were mostly women, were successful in showing that their work was of equal value to the work of warehouse operatives. The question then for the Tribunal to decide was whether the difference in pay could be justified by Next.

Next argued that various factors explained the difference in pay, including market forces, difficulty recruiting and retaining warehouse workers, and business viability, performance and productivity. The Tribunal found that those factors did not amount to direct discrimination. However, with reference to the equal value issue, it found that the differences in pay could not be justified.

77.5% of the retail workers at issue were female, whereas the warehouse workers were 53% male.  The Employment Tribunal found that this was enough to mean that Next’s policy of paying retail workers less basic pay than warehouse workers amounted to indirect sex discrimination because of its disproportionate impact on women.

Whilst the Tribunal accepted that there were reasons why the warehouse workers were paid at a higher rate, it did not accept that there was a valid justification in law for paying retail workers lower basic pay for work of equal value. Paying the retail workers a higher rate of basic pay would have cost more, and impacted profitability, but cost alone cannot provide the justification in law.

Next were successful in justifying paying certain other payments and bonuses to warehouse staff which were not paid to retail staff, as the Tribunal recognised that Next had faced challenges in retaining and incentivising warehouse staff that did not apply to retail staff.

Key Action Points for Human Resources and In-house Counsel

This landmark equal pay ruling could, reportedly, result in Next paying around £30 million in compensation and may have ramifications for other private sector equal pay claims. It is reported that Next plans to appeal the decision.

Thandi and others v (1) Next Retail Ltd (2) Next Distribution Limited