The tribunal found that the retailer paid warehouse workers, who were mostly men, more than shop workers, who were mostly women.
Representatives of Next relied on the argument that it did so as the market rates for warehouse workers were higher than for retail workers, BBC News reported on 27 August. However the tribunal rejected this as justification for the pay difference.
The tribunal decision showed that benchmarking salaries against the market rate could be sex discrimination, explained Emma Satyamurti, joint head of employment and discrimination at Leigh Day, the firm representing Next shop workers.
Speaking to HR magazine, she said: “The tribunal accepted that the statistics show that women predominate in the lower-paid retail roles, often due to their need for part-time working arrangements compatible with caring responsibilities, while the warehouse market has a predominantly male workforce.
“The market rate will often reflect historic attitudes to ‘men’s’ and ‘women’s’ work, particularly in sectors where there is gender segregation between different workforces (retail and warehouse in the present case).
“Next’s benchmarking of its hourly pay rates to these markets was therefore [indirect] sex discrimination.”
While the ruling stated that the decision was not direct gender discrimination, employment judge Jones ruled that Next could have paid the shop workers more but did not do so due to financial reasons, which posed a "proportionate disadvantage to women".
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“For market forces to be a trump card in this way would defeat the objective of the legislation; lower pay in particular sectors due to indirectly discriminatory practices could then be lawfully sustained in perpetuity,” the tribunal report noted.
Leigh Day is representing 112,000 store staff in similar equal pay claims against retailers Asda, Tesco, Sainsbury’s, Morrisons and Co-op, according to The Guardian (27 August).
HR could conduct job evaluations to ensure that pay decisions do not amount in equal discrimination claims, suggested Beverley Sunderland, partner at Crossland Employment Solicitors.
She told HR magazine: “The best way for a business to avoid an equal pay claim based on work of equal value is to have a fair job evaluation undertaken by an expert under which all job roles are rated and the employees are paid an agreed rate, whether they are men or women.”
Next could be ordered to pay up to £30 million in back payments to the 3,500 or more employees involved in the claim.
This case showed that employers should go beyond the requirements of pay gap legislation following the “highly significant” ruling, according to Melissa Blissett, pay gap analytics lead at Barnett Waddingham.
“One repercussion of this will be on employers’ gender pay gap reporting processes,” she told HR magazine.
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“It is evident from this result that it is not enough to simply meet regulatory reporting requirements. Employers need to conduct deeper data analysis and segmentation beyond this, to compare median pay rates of different groups of workers and review their remuneration strategy.
“For too long gender pay gap reporting has been an isolated regulatory tick box for some. This [case] shows the importance of making the connection with risk management and people sustainability strategy.”
Employers should also be aware of EU legislation and upcoming changes to UK employment legislation, Blissett added.
She continued: “From a horizon-scanning perspective, employers should have awareness of the EU pay transparency directive and also Labour’s statement in the king’s speech confirming that mandatory reporting will be extended to ethnicity and disability pay gap reporting – opening the gate for potentially wider equal pay challenges beyond gender.”
