The employment tribunal judgment in the case of high street retailer Next serves as a reminder that roles that may seem very different can be compared against each other under the equality legislation, to see whether they fall foul of the equal pay requirements.
In this case, more than 3,500 workers won a six-year legal fight for equal pay after accusing Next of paying its mainly female retail sales staff lower hourly wages than its warehouse workers, the majority of whom are male.
While the tribunal found that there was no direct discrimination, it held that the retailer failed to prove that the lower amount paid to its retail sales staff was not the result of gender-based discrimination.
If a typically female-dominated role, such as a retail consultant, is paid less than a typically male-dominated role, such as one in a warehouse, and those roles are shown to be of equal value, then the employer will be exposed to equal pay claims unless it can show the difference is for a non-discriminatory and significant reason. In the claims against Next, the tribunal had already in a previous hearing determined that the retail and warehouse roles were of equal value.
The most recent hearing was to decide whether the reasons for the pay disparity were discriminatory. In its defence, Next argued that the pay offered to employees in these roles reflected the market rate. However, the tribunal determined that this was not sufficient. Next was able to pay its retail staff more, but for financial reasons chose not to do so, and the tribunal ruled this could not be used as a blanket argument against equal pay rates.
Paying the market rate for a role has in the past been relied on and accepted as a defence to equal pay claims, but this case highlights the dangers of doing so. If the pay for a predominantly female role has historically been lower due to perceptions of what amounts to women’s work, then the market rate itself may be inherently discriminatory and in breach of equal pay principles.
These cases will always be fact-specific and the Next decision is not binding. The retailer has also indicated it will appeal the outcome. However, it is estimated that the amount due to the claimants is more than £30 million, with reports stating there are over 100,000 additional claimants waiting in the wings to bring claims against it and other large retailers. Given the high stakes involved, both financially and reputationally, employers should review their pay rates carefully and consider whether they need to undertake a formal job evaluation process, potentially with external professional input.
Keely Rushmore is an employment partner at Keystone Law
