The Next judgment: a landmark in the history of equal pay?

Susan Milner | 17 September 2024

The employment tribunal case of Ms M. Thandi and others v. Next Retail Limited and Next Distribution Limited, announced on 5 August 2024, has been hailed as a landmark in the long struggle for equal pay, as the first major case to find evidence of unjustifiable pay disparities between predominantly female and male groups of workers in the same company, but different sites, in the private sector. Around 3,500 current and former workers participated in the claim, with more women expected to join; with an average estimated payment of £6,000 in lost earnings, it is thought Next will need to pay over £30 million, and it will have to equalise pay rates from now on.

In this case, shop workers (mostly women) were found to be doing work of equal value to male comparators working in warehouses to fulfil online shopping orders, although they had been paid up to £3 less per hour for years (for some individuals, decades). The tribunal found that this disparity amounted to indirect discrimination, and that Next’s defence, based on an argument of ‘market forces’ and business need to keep costs low, did not constitute justifiable grounds.

Although the judgment is not binding on other employers, it is likely to have an immediate impact in retail, where workers in similar situations can draw on the findings, and it also has wider significance. Employment lawyers and human resource management experts have been vocal in urging all employers to conduct equal pay audits to identify and address any disparities. Employers cannot rely on business viability arguments as defence.

In the retail sector, several long-standing equal pay claims have been making their way through the tribunal system: in September 2024, the case of Brierley and others vs Asda Stores Limited began its third stage of hearing, after Asda unsuccessfully appealed against a 2019 ruling that shop workers could claim comparability with warehouse workers. The Next workers’ successful claim could have a direct impact on the outcome of that case as employment judges compare the two sets of jobs in detail. The Asda claim is even larger in size, covering over 60,000 workers and expected to cost well over £1 billion if successful.

The public sector has faced the consequences of long-standing unequal pay practices for decades. Claims were more straightforward in the public than private sector because of formal grading systems and job evaluation. Strikingly, as in the private sector, however, employers often resisted claims, resulting in a backlog which continued over many years. In 2012, a ‘landmark’ judgment against Birmingham City Council found that predominantly women employed as assistants, cleaners and catering staff should have had access to the same bonuses as men employed as refuse collectors and street cleaners. Dealing with over £1 billion in payments to employees who had been unfairly discriminated against was a significant factor in the council’s slide into bankruptcy. Sally Maybury, one of the 174 women who claimed discrimination, asked why the council could not have paid workers fairly during the 22 years she worked there: ‘This is the third time - why couldn't they get it right after the first and second generation claims all those years ago?’

Why did the Next case take so long to reach a judgment?

The Next claim was lodged in 2018 (and the Asda case referred to above began even earlier, in 2008, with its first hearing in 2016). The length of time required to resolve equal pay claims is widely acknowledged to deter many would-be claimants from pursuing action, alongside the difficulty of proving discrimination according to British law.

The complexity of determining pay discrimination was amply shown in the retail cases. First, the tribunal had to decide whether the two occupations were comparable; second, whether the content of jobs demonstrated equal value; third, whether direct or indirect discrimination (treating someone with a certain characteristic less favourably than others without that characteristic, in the first case, and using policies or practices that have a disproportionately large negative impact on people having a protected characteristic such as age or gender, in the second case) could be proved; and finally, whether the employer was able to justify payment of different rates for comparable jobs.

The comparison of jobs in shops and warehouses is made more difficult because both sets of workers are employed by the same company, but not only are they in different locations, but sometimes different administrative units of the same entity. This difficulty helps to explain why the Asda case, originally lodged by claimants at stores in Manchester but subsequently widened, took so long to reach a ruling on comparability. Once comparability has been established, there is the detailed work of comparing each component of jobs, using not only formal job specifications and evaluations but employees’ and managers’ descriptions of daily tasks, which are verified as far as evidence is available and exhaustively checked against other accounts. External experts are usually brought in to assess physical and mental job requirements (three, in the Next case).

In considering the claim of indirect discrimination, the tribunal’s reasoning referred – among other legal principles - to ‘Enderby type discrimination’, that is, the argument that specific characteristics of the claimants (in this case being women)  put them at a disadvantage because they are more likely to be employed in lower-paid occupations. This disproportionate effect is most often demonstrated by statistics showing very large imbalances in workforce composition: in the Enderby case of 1997, nearly all speech therapists in the employing health authority were women, and nearly all senior pharmacists and clinical psychologists were men. Pam Enderby’s case constituted a breakthrough for equal pay claims, because it was the first case lodged after the Equal Pay Act 1970 was amended in 1983, following infringement proceedings by the European Commission concerning the UK’s failure to implement fully Article 119 of the Rome Treaty on equal pay for work of equal value }.

 Enderby later said of the process that ‘I did feel that if we had a few people round a table, we could sort it out immediately. It took 14 years. So many tribunals, so many high courts and everything was so laboured.’

Even once established in case law, the Enderby precedent was subsequently the subject of tortuous tribunal claims and counter-claims about the extent to which egregious gender segregation could be taken as an indication of indirect discrimination. The Next judgment appears to have resolved the discussion only partially, as it is likely that tribunals will continue to want to see supporting evidence alongside the basic statistics.

The consequences of failure to deal with equal pay

The Equal Pay Act 1970, soon to celebrate its fifty-fifth anniversary, and its successor the Equality Act 2010 (soon to celebrate its fifteenth), have resulted in a series of landmark rulings which have each not only helped to redress inequality in those specific cases, but clarify the legal principles underpinning equality law in the UK. And yet the law continues to prove difficult to navigate for claimants, and has met resistance in its implementation from employers across the economy, including the public sector. It took the introduction of ‘no win, no fee’ action by law firms, alongside the support of trade unions, to take cases forward, in the face of foot-dragging by the state and employers. The large scale of cases reflects a failure to deal with equal pay claims, resulting in a backlog. With the retail cases providing new clarity and encouraging stronger action by employers to address pay inequality before litigation occurs, there is some hope of breakthrough, although women workers continue to bear the brunt of cost-cutting practices, which appear to be a stronger pressure for many employers than fear of litigation. Labour ministers have also promised action to strengthen the law, for example by making it easier for individuals to claim discrimination on more than one ground, although it remains to be seen whether they will take on board proposals from campaigners for more thorough-going reform, such as comprehensive rights to pay transparency. More broadly, as a society we need to address how and why women’s work has been undervalued for so long. It seems utopian, maybe, to try to think of a different approach, whereby work is valued fairly for the full contribution it makes, rather than reliance on assumptions about ‘market’ value, or bargaining power, which can sometimes be skewed. This would not only improve the health and wellbeing of individual workers, but wider society – and, from available evidence, the economy too.

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About the author

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Susan Milner is Professor of European Politics and Society at the University of Bath, and a member of the History & Politics Employer and Trade Union Forum. In 2024 her monograph Women and Employment in Public Policy. Learning from the Women and Work Commission (Oxford University Press) presented findings from her 2019 Leverhulme Major Fellowship. See also the Forum's podcast on 'Women and Employment'.