The EAT found errors in the tribunal’s approach to Next’s reasons for higher warehouse pay
The Employment Appeal Tribunal (EAT) has partly allowed Next’s warehouse pay appeal against findings that it had failed to justify differences between the pay of predominantly female retail sales consultants and warehouse operatives.
In Next Retail Ltd and Next Distribution Ltd v M Thandi and others [2026] EAT 130, Mr Justice Bourne found that the Leeds Employment Tribunal had erred in assessing whether Next had a legitimate aim for setting different rates of pay. However, the EAT upheld the tribunal’s finding that the claimants had established particular disadvantage and dismissed their cross-appeal on direct discrimination.
The case involved 3,540 retail sales consultants. Their work had previously been found to be of equal value to that of warehouse operatives. The claimants brought equal pay claims under the Equality Act 2010, while Next relied on the statutory “material factor” defence under section 69.
The EAT’s central finding concerned basic pay. The tribunal had characterised Next’s objective as essentially saving costs and concluded that the difference was not justified. Mr Justice Bourne disagreed. He held that the aim had to be fairly characterised as a whole and included Next’s need to recruit and retain sufficient warehouse staff to maintain its warehouse service. The fact that Next could have afforded to increase retail pay did not, by itself, make its objective illegitimate.
The EAT also rejected Next’s challenge to the finding of particular disadvantage. The difference between the gender profiles of the retail and warehouse workforces, together with evidence concerning market benchmarking and part-time working, provided a sufficient evidential basis for the tribunal’s conclusion. The judge also upheld the tribunal’s reliance on the specific circumstances of working hours when considering the childcare disparity.
The ruling did not, however, remove all of the findings against Next. The EAT upheld the tribunal’s decision concerning the change to retail night-time premium hours and paid rest breaks. It found that, on those issues, the tribunal was entitled to conclude that the relevant differences were driven by cost-saving considerations.
The EAT also found that the tribunal had erred in its treatment of unconsolidated awards, concluding that the payments formed part of the warehouse pay package and were made following collective bargaining with USDAW. The tribunal had therefore been wrong to characterise the aim as “costs only”.
On Sunday pay premiums, the EAT found that the tribunal’s reasoning was inconsistent with its own factual findings concerning legacy payments and collective bargaining. It therefore allowed the relevant appeal ground but said it could not reach a final conclusion on proportionality.
The claimants’ cross-appeal was dismissed. The EAT held that reliance on market forces does not automatically amount to direct discrimination and that there was sufficient evidence for the tribunal’s finding that Next’s decision-makers had not been influenced by sex when setting basic pay.
The EAT concluded that Next’s appeal succeeded to the extent set out in the judgment, while the cross-appeal was dismissed. The judge said further submissions would be invited on disposal and consequential matters