The long-running Next equal pay case took a significant turn on 7 September 2026 when the Employment Appeal Tribunal (EAT) overturned a key finding against the retailer.
The decision in Next Retail Ltd and Next Distribution Ltd v Thandi and others [2026] EAT 130 held that Next could rely on recruitment and retention pressures as a justification for paying higher rates to warehouse workers. On that basis, it overturned an earlier finding against the retailer on basic pay.
The decision carries major implications for how UK employers can justify pay differences for work of equal value, particularly where those differences are attributed to market forces.
What Is the Background of the Next Equal Pay Case?
More than 3,500 predominantly female retail staff, a group that has since grown to more than 6,400, brought equal pay claims against Next comparing their pay to that of predominantly male warehouse staff.
In 2024, the Employment Tribunal found the two roles to be of equal value under the Equality Act 2010, based on effort, skill, and decision-making; awarding the plaintiffs an estimated £30 million.
The Employment Tribunal rejected Next’s material factor defence. Under that defence, an employer can justify a pay disparity where it is genuinely attributable to a gender-neutral factor and that factor is a proportionate means of achieving a legitimate aim. The Tribunal found that the retailer had not pursued a legitimate aim in setting different pay rates, including for basic pay.
What the Appeal Tribunal Decided
The EAT overturned the 2024 basic pay finding. It held that Next could rely on recruitment and retention pressures as a legitimate aim, even though those pressures did not apply to the retail claimant group.
The EAT, however, upheld the Tribunal’s findings against Next on night premium, overtime premium, and rest breaks, and it remitted the Sunday premium issue back to the Employment Tribunal.
Both sides now intend to appeal further: Next on the remaining adverse findings, and the claimants on basic pay.
What Does This Mean in Regard to Market Pay?
While certain market factors can support pay decisions, this ruling does not endorse a general market-rate defence against pay inequities.
The EAT’s conclusion rested on role-specific, contemporaneous recruitment and retention evidence covering the relevant period. Market forces succeeded here as one input into a legitimate aim, not as a standalone justification. An employer that simply points to prevailing market rates, without evidence tying those rates to a genuine business need at the relevant time, is unlikely to fare as well.
Two further points sharpen the caution:
- First, justification does not transfer across pay elements. Basic pay, premiums, and rest breaks each require their own separate justification, which is precisely why Next prevailed on basic pay yet lost on night and overtime premiums.
- Second, the circularity objection that the same market conditions causing a pay gap cannot also justify it was rejected but is now heading to appeal.
The litigation is not final and should still be monitored throughout the appeal process.
The Practical Lesson for Employers
The safest position is not to depend on market factors at all as a defence for pay decisions.. Market-based reasoning may support a defence, but it is fragile, fact-specific, and still being tested in the higher courts.
Durable protection comes from getting the fundamentals right: properly graded and architected jobs, detailed Wage Influencing Factors (WIFs), well-constructed Pay Analysis Groups that compare genuinely comparable work, and a fully formed, documented pay philosophy that explains how and why pay decisions are made. Employers who can show a legally defensible methodology, rather than a reflexive appeal to what competitors pay, are the ones best placed to withstand scrutiny.
This is where Trusaic’s PayParity® supports employers. PayParity uses intersectional, regression-based analysis to identify pay disparities across gender, race/ethnicity, age, and more, builds defensible pay analysis groups, and supports remediation planning so that pay decisions rest on evidence rather than assumption.
