The decision of Ms M Thandi and Others v Next Retail Ltd and Next Distribution Ltd, handed down by the Leeds Employment Tribunal this week, could have significant repercussions for any employer in the retail sector.
The Employment Tribunal had previously already determined that the work carried out by (predominantly female) retail workers was of equal value to the work carried out by their (predominantly male) warehouse operative counterparts. Such workers should therefore receive equal pay for such work. However, NEXT had sought to argue that it had a ‘material factor’ defence to the difference in pay – that is, a reason unrelated to sex which explained the difference, and was a proportionate means of achieving a legitimate aim.
The Tribunal has now concluded that it did not have such a defence. The reasons relied upon by NEXT for paying enhanced payments to warehouse operatives and not retail workers – including market forces and market price; recruiting and retaining sufficient warehouse labour; maintaining 24/7 work in the warehouse, including night shifts, overtime, Sundays and public holidays; incentivising high productivity and consistent and high attendance within the warehouse; business viability, resilience and performance of the NEXT Group and subsidiaries – effectively all amounted to their wanting to keep labour costs for retail workers to a minimum in order to increase profitability. Ultimately, they could have paid the retail workers the same amounts, they just chose not to for profitability reasons. This was therefore a ‘costs only’ aim, and was therefore not a legitimate aim. NEXT’s justification arguments therefore failed in relation to a number of pay strands, including basic pay.
Whilst NEXT’s arguments did succeed in relation to certain bonuses and premiums paid to warehouse operatives, the decision is nonetheless significant and should prompt all employers in this sector to review their pay practices to ensure compliance with the law. Equal Pay claims are contract claims and as such, the Employment Tribunal can award damages going back six years. They are also notoriously complex and lengthy, and the time and costs of dealing with such claims can be significant.
We would therefore strongly urge all clients to carry out a review as soon as possible to ensure that their pay policies do not fall foul of this decision. If any advice or guidance is required, the team at Tyr are more than happy to assist.
Contact details
Gemma.Sherbourne@tyrlaw.co.uk +44(0) 7535 652758
