Next warns of store closures if equal pay appeal fails

Next has warned that store closures may be necessary if its appeal against a recent equal pay ruling fails. Last month, more than 3,500 current and former Next employees won a six-year legal fight for equal pay, with the total amount payable by the retailer estimated to be over £30m.

An employment tribunal ruled that Next failed to show that paying their sales consultants, who are “overwhelmingly” women, lower hourly pay rates than their warehouse operatives was not sex discrimination.

The staff who brought the claim will be entitled to compensation through back pay going back up to six years from when they put in their claims.

However, Next has since planned to appeal the decision, but warned that some of its stores “may no longer be viable” if the ruling is upheld on appeal.

At the time of the ruling, Next told Retail Sector: “The tribunal rejected the majority of the claims made by the claimants, in particular all claims of direct discrimination, and all aspects of the claims made in respect of bonus pay. The tribunal expressed serious criticisms of the claimants’ expert evidence, and overwhelmingly accepted the evidence of Next’s expert and fact witnesses. 

“In respect of the specific terms in which the claim succeeded, it is our intention to appeal. This is the first equal pay group action in the private sector to reach a decision at tribunal level and raises a number of important points of legal principle.” 

In its latest half-year results, it warned that a loss on appeal will financially hit the group and affect its ongoing future operating costs. 

The retailer said: “Each of our stores is treated as a business in its own right, and must remain individually profitable if they are to open in the first place and continue trading at lease renewal. Inevitably some of our stores will no longer be viable if this ruling is upheld on appeal.” 

It said that increasing store operating costs will result in more shops being closed when their leases expire, and will “impede our ability to open new stores going forward”. It also warned of the effect the case could have on the “viability” of its warehouse operations. 

The news comes as Next announced that it has upped its full-year profit guidance by £15m, up to £995m, as it closes in on £1bn profit.

This is the second time in two months that Next has increased its guidance after increasing it in August to £980m as a result of strong summer sales.