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- ⚖️ Next’s equal pay case (and why it matters)
⚖️ Next’s equal pay case (and why it matters)
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If you take just one thing from this email…
Next was found guilty of indirect gender discrimination. They were paying their mostly female retail workers less than their warehouse staff, despite both groups performing ‘work of equal value’ — warehouse workers were paid up to £3 more per hour. Next argued that the pay gap was due to lower demand for warehouse roles. Now, they face £30 million in back-payments. This ruling could impact other major retailers facing similar claims.
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FEATURED REPORT 📰
⚖️ Next’s equal pay case (and why it matters)
Credit: Giphy
What's going on here?
The Employment Tribunal (a judicial body which hears claims from dissatisfied employees) ruled that Next, the clothing and homeware shop, breached equal pay laws by paying its mostly female retail workers less than its warehouse staff, where genders are more equally split.
The decision means 3,500+ current and former Next floor staff will be eligible for a back payment of £30 million in total. Next will also have to change retail workers’ contracts so they are entitled to the same hourly pay, rest breaks, and overtime.
How did Next break the law?
In 1983, the UK introduced regulations to implement Europe’s Equal Pay Directive. This meant men and women must get equal pay if they are performing:
Like work (where the job is the same),
Work rated as equivalent (work that requires the same skills, responsibility or effort), or
Work of equal value (work which is different, but because of the level of skill, training, and responsibility required, is equally demanding).
Next employees argued that retail consultants were performing ‘work of equal value’ to the warehouse staff. To argue this, there was a detailed assessment of 11 different aspects of the two roles – things like physical skills, problem-solving, and decision-making – and the court agreed the work was of ‘equal value’.
78% of Next’s retail workers are female, compared to only 48% of its warehouse staff. Warehouse staff were being paid between 40 pence and £3 more per hour.
Because of this gender split, the Tribunal decided the difference in pay (of between 40 pence and £3 per hour) was a form of indirect discrimination.
What was Next’s defence?
You’re allowed to have a pay difference between two jobs of ‘equal value’ if the employer can show the difference is for a legitimate reason. This could be because the jobs are in different locations, have different levels of seniority, or just due to supply and demand in the job market.
Next argued that the pay gap was due to supply and demand – they say it’s harder to hire and keep warehouse workers, so they had to offer higher pay to attract them. But the Tribunal rejected this argument, saying it wasn't a strong enough reason to justify the indirect discrimination. They were concerned that allowing this ‘supply and demand’ defence could lead to more discriminatory pay in some sectors being justified.
Is the Tribunal’s decision right?
It’s addressing gender pay inequality – which is good, of course.
But, some people think the Tribunal’s decision doesn’t make sense.
Why? Well, when job evaluations are conducted to decide which jobs are of ‘equal value’, they ignore more specific factors (like how easy it is to find workers for each job).
For example, warehouse work can be more lonely compared to working with customers in Next stores. Also, warehouses are often in remote areas, while jobs in city-centre stores mean you can run errands or grab lunch easily. Factors like these might be why it’s harder to find warehouse workers than retail staff.
But these sorts of factors aren’t taken into consideration because they’re hard to quantify – even though they do affect how attractive a job is to prospective employees. So, businesses argue that you’re blocked from setting higher pay for less attractive jobs (like warehouse work, in Next’s case).
So, to avoid litigation, employers would have to increase the amount paid to the more attractive job of ‘equal value’ to match the less attractive role. This means more costs for businesses and could end up in them cutting workers altogether (like how supermarkets have replaced people with self-service checkouts).
Which law firms are involved?
Next is being represented by Eversheds Sutherland, as the firm has a long-standing relationship with the retailer.
Leigh Day is representing the retail workers who are bringing this claim. This is part of the law firm’s programme called ‘Equal Pay Now’. Through this, they’re advocating for over 112,000 store workers employed by Next and five major supermarkets in equal pay litigation.
Why should law firms care?
Next has said it will appeal the Tribunal’s decision — and if it goes ahead, the decision of the appeal will reach far wider than Next.
There are similar claims against five major UK supermarkets (Asda, Tesco, Sainsburys, Morrisons, and Co-op), mostly the difference in pay between female-dominated shop floor roles and male-dominated warehouse roles. The result of Next’s appeal could lead to many more cases like this in retail.
Commercial law firms will be updating their retail clients about these cases. They’ll be advising them to take steps to address equal pay issues (things like conducting job evaluations to identify equal value jobs and pay audits across their employees). These actions can help prevent problems, but there’s still a chance courts might disagree with how employers define job roles.
The newly-elected Labour government has also promised to expand equal pay protections to cover ethnicity and disability. If this happens, we could see more legal avenues to bring cases like this in the future.
Credit: Laura White
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