World of HR: Employment tribunal in the UK overturns pay gap ruling

The UK Employment Appeal Tribunal (EAT) just ruled that some pay differences may be justified, as the UK and EU work out how to implement gender pay transparency legislation.

The decision overturned a 2024 ruling on a lawsuit brought against retailer Next by more than 3,500 of its retail employees, who alleged pay discrimination resulting in a gender pay gap among retail workers (78% of whom were women) and warehouse workers (53% of whom were men) between 2012 and 2023, Human Resources Director reported.

The 2024 ruling sided with the plaintiffs, but the appeal court found that the company had the right to pay its warehouse workers at a higher rate based on recruitment needs.

While EAT overturned this ruling, it upheld previous findings that the company had unfairly denied paid rest breaks and overtime pay.

“Next paid the rates to warehouse staff which it needed to pay for sound business reasons, and no more, and those business reasons did not apply to the retail staff,” Justice Bourne said in the decision.

The judgment could have implications for the retail sector by opening the door for other employers to potentially determine pay based on workforce and retention needs, according to the Irish Times. Similar lawsuits are pending against retailers Asda, Tesco, Sainsbury’s, Morrisons, and Co-op, all of which are represented by the UK law firm Leigh Day.

“The aim, taken as a whole, of paying higher rates to warehouse staff included recruitment and retention factors which did not apply to the claimant group,” the tribunal ruled. “It was not necessary for the employer to justify not increasing the claimants’ pay to the same level.”

Elizabeth George, a partner with Leigh Day, disagreed with the judgment in a statement. “If an employer need only show it pays the market rates to justify pay discrimination, the very market conditions that give rise to the discrimination then become the legal justification.”