Next Retail Limited & Anor v M Thandi and Ors

Under the Equality Act 2010, market-rate pay differences are neither automatically justified nor automatically discriminatory. A tribunal may find particular disadvantage from sex-composition statistics considered with evidence about benchmarking and working patterns. The employer’s legitimate aim must be assessed by fairly characterising the reason for the difference as a whole. A recruitment and retention rationale for higher comparator pay may apply even if it does not justify raising claimant pay. Proportionality remains a separate, case-specific question; there is no special requirement for a more compelling business reason. Reliance on market forces does not invariably establish direct discrimination, and an employer may prove its reasons through circumstantial evidence.

Some 3,540 retail sales consultants brought equal-pay claims against Next, alleging that they received less than warehouse operatives doing work of equal value. An earlier decision of the same Employment Tribunal had established equal value for the lead claimants and named comparators. In a decision sent on 22 August 2024, the Leeds Employment Tribunal rejected Next’s material-factor defence for basic pay and several other pay terms, while allowing it for other terms. Next appealed findings against it. The claimants cross-appealed the finding that the differences did not involve direct discrimination. The central issues included whether statistics and related evidence established particular disadvantage, whether Next pursued a legitimate aim and acted proportionately, and what evidence was needed to establish the reasons for its pay decisions.

1. Disposition. Next’s appeal succeeded in part. The claimants’ cross-appeal was dismissed. The Tribunal invited further submissions on disposal and consequential matters.
2. Particular disadvantage. The Employment Tribunal did not err in finding particular disadvantage under section 69(2) of the Equality Act 2010. It was entitled to assess the difference between the sex profiles of the claimant and comparator groups alongside evidence about pay benchmarking and part-time working. The statistics were not overwhelming, and the EAT did not hold that statistics alone would necessarily suffice. The Tribunal also applied Dobson v North Cumbria Integrated Care NHS Foundation Trust [2021] ICR 1699 correctly: childcare disparity does not by itself prove group disadvantage, but the Tribunal could consider it in the specific circumstances.
3. Basic pay and legitimate aim. The Tribunal erred by focusing on why retail staff were not paid more, rather than fairly characterising the reason for the difference between the groups. On its findings, Next paid higher warehouse rates to recruit and retain sufficient staff, and that rationale did not apply to retail staff. The Tribunal was not entitled to require a separate justification for not raising retail pay to the warehouse level. That approach was inconsistent with Heskett v Secretary of State for Justice [2021] ICR 110 and the reasoning in Rainey v Greater Glasgow Health Board [1987] 1 AC 224.
4. Proportionality. Legitimate aim and proportionality are separate questions. Enderby v Frenchay Health Authority [1994] ICR 112 recognises that a shortage of candidates and the need to attract them with higher pay may justify a differential, depending on the facts. The Tribunal erred by requiring a more compelling business reason and by treating affordability of equalisation as central. On the findings that Next needed to pay the warehouse market rate for sound business reasons and paid no more than that rate, the differential was proportionate.
5. Other pay terms. The findings on unconsolidated awards and long-service awards could not stand: the collective-bargaining rationale applied to warehouse staff, and the Tribunal erred by requiring Next separately to justify not equalising the terms. The Tribunal’s Sunday-premium analysis was inconsistent with its finding that Next was not in a position to remove legacy warehouse payments; the EAT did not determine the ultimate proportionality outcome. The challenges concerning night-time premiums, overtime premiums and paid rest breaks failed.
6. Direct discrimination and evidence. Section 69(1)(a) is concerned with direct discrimination and must be read consistently with section 13 of the Equality Act 2010. Direct discrimination does not invariably follow from reliance on market forces without evidence that the market is sex-neutral. The Tribunal had a sufficient evidential basis to find that sex did not influence Next’s pay decisions. There is no rule requiring an employer to call a Board member or produce documents stating the decision-makers’ reasons. A tribunal may draw inferences from evidence given by a suitably knowledgeable witness, and the absence of documents does not compel an adverse inference.

1. Employment Appeal Tribunal — Next’s appeal succeeded in part and the claimants’ cross-appeal was dismissed. Further submissions were invited on disposal and consequential matters: [2026] EAT 130 .
2. Leeds Employment Tribunal — Decision sent to the parties on 22 August 2024; Next appealed findings that its material-factor defence failed for basic pay and certain other terms, and the claimants cross-appealed the rejection of direct discrimination.