In May 2023, 2,000 employees of UK retailer Next plc, won the second stage of their equal pay claim. In the second stage of the Next equal pay case, an employment tribunal ruling agreed that the work of its predominantly female sales consultants was of equal value to warehouse jobs occupied by mainly male workers.
The unanimous decision means that the burden of proof now shifts to Next to prove there is a non-discriminatory reason for the difference in pay.
The third and final stage of the case is expected to be concluded by May 2024. The average salary loss is estimated at over £6,000 ($7,500), which could result in tens of millions of pounds in backdated compensation for the retailer.
In 2021, over 400 Next employees working in the company’s retail and fashion outlets won the first stage in their claim for equal pay, when Next conceded that the warehouse jobs comparison was valid, and the two types of roles could be compared. The claim was first initiated in 2018, when the employees filed a claim with conciliation service Acas.
Lawyers Leigh Day stated that store employees in the Next equal pay case are entitled to receive the difference in their pay for up to six years from the beginning of the case to its conclusion. Ongoing contracts of employment would also be amended to include equal terms. Leigh Day is also representing over 85,000 supermarket shop floor workers in Asda, Tesco, Sainsbury’s, Morrisons, and Co-op in equal pay cases.
The ruling of this case has significant implications for supermarket employees, whose claims also focus on warehouse jobs comparisons. The most recent rulings in all cases have determined which roles are comparable for the purposes of equal pay. In 2021, Bloomberg estimated the potential combined costs of the equal pay claims for the supermarkets at $11 billion (£8 billion).
In April 2023, the UK’s Court of Appeal rejected supermarket Sainsbury’s attempt to throw out an equal pay claim on a technicality. The retailer argued that the employment tribunal should have rejected the case as most claimants’ names were omitted on early-stage paperwork.
Under the UK’s Equality Act 2010, men and women performing equal work are entitled to equal pay, unless a pay difference can be justified. The UK’s Chartered Institute for Personnel Development (CIPD) defines equal work as:
Next’s gender pay gap report for 2022 revealed a mean gender pay gap of 31.2% compared to 24.2% in 2021. The mean gender bonus gap is 72.2% (up from 63.3%). Part of the claim against the company relates to more lucrative bonuses for warehouse employees.
Next employs approximately 43,000 employees in the UK.
The Next equal pay case is symptomatic of an underlying global trend towards pay equity which may also impact the outcome of Asda, Tesco, Sainsbury’s, Morrisons, and Co-op equal pay cases. This trend includes several key developments:
In the UK, Next’s Gender Pay Gap Report states that its pay gap is strongly influenced “by the fact that such a high percentage of our colleagues in stores are women. Therefore, overall we have a significantly larger proportion of women than men in our lower paid roles.”
It also states that it is committed to ensuring “salary differentials between individuals .. are fair and justifiable.”
The employment tribunal ruling means that statement must now be supported in court.
A commitment to pay transparency and pay equity must be a priority for all employers. It not only helps to avoid a negative impact on your employer brand, but creates more inclusive organizations, resulting in greater customer satisfaction, more innovation, improved financial returns, more engaged employees and attracts more talent.
The CIPD recommends that all organizations should:
A pay equity audit is the first vital step to identifying pay disparities in your organization. Trusaic’s PayParity is a software solution that conducts a pay equity audit at the intersection of factors such as gender, race/ethnicity, age, and disability. The results identify risk areas for remediation and pay gaps within every employee group and at every level in your business.
Talk to one of our pay equity experts today.
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