Equal pay claim: Thandi and others v Next Retail Limited

Over 3,500 predominantly female retail consultants employed by Next Retail Limited (Next) collectively brought an equal pay claim against their employer.

The claim was on the basis that the work carried out by the predominantly female retail workers was of equal value to the operative work carried out in the warehouses by predominantly male workers. Therefore, it was discriminatory for Next to pay the male warehouse employees significantly more by way of basic pay, premiums and bonuses, in comparison to the female retail workers.

In the first instance, in 2023, the employment tribunal (ET) established that both groups were doing equal work of equal value. This led to the question of whether Next had any material factors which they could rely on as a defence to justify the disparity in pay. Consequently, in 2024, the ET reconvened to assess whether such defence could be relied upon.

Next argued that the reason for the elevated pay was due to the following factors:

• Market forces and market price
• Recruiting and retaining adequate staff
• Preserving performance (night shifts, overtime, and public holidays)
• Incentivising productivity
• Incentivising attendance (especially, during periods of demand)
• Business viability, resilience and performance (including that of any Group companies and subsidiaries).

The ET found there was no direct discrimination, since there were females working in the warehouse who received the same amount of basic pay and had the same opportunity to obtain premiums and bonuses when compared with males in that field. Additionally, the pay discrepancy in relation to the bonus and premium payments was influenced by attendance and productivity and therefore was accepted as a material defence, justifying the pay disparity.

However, by contrast the ET did find that Next’s conduct in how they benchmarked pay did amount to indirect discrimination. Next had used market benchmarks for warehouse staff which were based on a predominately male labour market, despite approximately 78% of their retail staff being female and approximately 53% of the warehouse staff being male. The ET held that the primary reason for this benchmarking was cost cutting alone. Next could have opted to pay the elevated rate for both retail and warehouse workers, but instead chose to maximise their earning potential.

The ET outlined that cost alone could not be a “trump card” to justify disparity in pay between men and women as this would defeat the aims of equal pay legislation. Ultimately, there must be a “more compelling business reason for such arrangements” that go beyond simply making more profit. Next failed to establish this and as a result, the female workers won their claim for equal pay.

What does this mean?

This case is a key reminder of the various grounds on which equal pay claims can be brought. Firstly, the work undertaken by men and women does not need to be identical; it is sufficient that it is of ‘equal value’ to the business, as was the case here.

Secondly, it provides clarification that cost saving alone cannot be used to justify unequal pay, especially if a business can afford to pay its staff equally, but chooses not to. You must have a compelling business reason for the discrepancy which is legitimate and proportionate.

This case makes it clear that the legal duty to pay your male and female workers equally should never be sacrificed due to a desire to make a greater profit.

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