The Employment Appeal Tribunal has overturned an important part of the equal pay decision against Next, accepting that genuine recruitment and retention pressures can justify paying warehouse workers more than retail staff whose work has been assessed as being of equal value. It is a welcome reminder of something politicians, employment law and trade unions appear reluctant to acknowledge: there is no objectively correct monetary value for a job.
Next Retail Ltd and Next Distribution Ltd v Thandi and others [2026] EAT 130, decided by Mr Justice Bourne on 7 September 2026. (GOV.UK)
What was the dispute about?
The claim was brought by predominantly female retail sales consultants who compared their pay with predominantly male warehouse operatives. The Employment Tribunal had found that the work was of equal value, but the warehouse workers were paid more.
Next did not dispute the pay difference. Its case was essentially that the two groups operated in different labour markets. There were particular difficulties recruiting and retaining warehouse workers which did not exist to the same extent in its stores. It therefore had to pay warehouse workers more.
The original Tribunal accepted much of the evidence behind that argument. It found that there were specific recruitment pressures in the warehouse labour market and that Next could not simply reduce warehouse pay without risking its ability to operate its distribution network. Nevertheless, it decided that Next had failed to justify the basic-pay difference. Among other things, it considered that Next could afford to increase the retail workers’ pay instead. (Tribunal Database)
The EAT found that approach was wrong.
The relevant question was not simply: why didn’t Next pay the retail staff more?
It was necessary to look at why Next paid the warehouse workers more.
On the Tribunal’s own findings, Next needed to pay the higher warehouse rate because of recruitment and retention pressures which did not apply to the retail workforce. The EAT concluded that the Tribunal had wrongly characterised Next’s objective as simply saving money and had placed too much emphasis on whether Next could afford to equalise pay upwards.
The EAT rejected the suggestion that market forces could only justify a difference where there was some additional, particularly compelling business reason.
There is no objectively correct value for a job
For me, this is the most interesting aspect of the judgment.
Equal pay legislation is, by its very nature, an intervention in the labour market. That may be justified as public policy and politically expedient, particularly where different rates of pay are genuinely caused by sex (they rarely, if ever, are). But problems arise when we move from preventing discrimination to the idea that it is possible to establish some objectively correct monetary value for a particular job.
The value of a job to an employer and the wage required to fill it are different things. Pay is affected by scarcity, geography, working conditions, alternative employment, skills availability and, above all, what an employer has to offer to persuade suitable people to do the work.
Sometimes a highly skilled job is relatively easy to recruit for. Sometimes a much less technically demanding job is extremely difficult to fill.
The market does not award points for responsibility, knowledge, physical demands or communication skills and then convert the result neatly into pounds per hour.
Which brings me to job evaluation
I should declare an interest here: I have written job evaluation schemes.
They can have a purpose. They can help an organisation establish internal consistency, identify obvious anomalies and make its pay decisions more systematic, but above all, their purpose is to protect employers from legal challenges in equal pay claims.
We should not confuse that with discovering the true economic value of a job.
At their worst, job evaluation schemes take a series of subjective judgments, convert them into apparently precise numerical scores and then give those scores an authority which the underlying judgments do not deserve.
We decide that one role scores 40 points for responsibility, another scores 35; add points for knowledge, complexity, physical demands and communication; and eventually announce that two jobs are of “equal value”.
There may be administrative value in the exercise. But the number at the end does not establish what somebody needs to be paid to persuade them to take the job.
The market does that.
What the EAT has – and has not – decided
This judgment should not be overstated.
The EAT has not said that an employer can simply respond to an equal pay claim by saying “market forces” and end the argument.
Section 69 of the Equality Act 2010 still requires an employer relying on a material factor which particularly disadvantages one sex to establish objective justification. Market forces therefore do not provide an automatic defence. The EAT expressly said that whether reliance upon them is justified must be decided on the circumstances of the individual case.
Nor did the EAT challenge the finding that the retail and warehouse jobs were work of equal value.
What it did recognise, however, is the important distinction between equal value for the purposes of equal pay legislation and equal market price.
Those are not the same thing.
In Next’s case, the evidence established genuine pressures in recruiting warehouse workers. Next paid the warehouse rate it needed to pay for sound business reasons and no more, while those same reasons did not apply to its retail staff. Mr Justice Bourne concluded that, on the Tribunal’s own factual findings, the basic-pay differential was a proportionate means of achieving a legitimate aim.
A small glimmer of economic reality
It is simply not the case that every difference in market pay between two jobs which a job evaluation exercise declares to be “equal” is discriminatory or somehow economically irrational.
Employers operate in real labour markets.
If you cannot recruit somebody at £12 an hour but you can recruit them at £14, then – subject to what the business can afford – the job costs £14 an hour to fill. Paying another group £14 simply because an evaluation exercise has decided that their jobs are equivalent does nothing to change that economic fact.
That, for me, is why Next v Thandi is significant.
It does not dismantle equal value law. It does not make market forces a trump card. And employers relying upon market pressures will still need evidence that those pressures genuinely explain and justify the difference.
But it does inject a welcome dose of economic reality into the discussion.
A job can be of “equal value” for the purposes of the Equality Act without having an equal price in the labour market.
That may sound obvious, economics 101 levels of obvious, but it has taken a considerable amount of legal argument to say it.
Case: Next Retail Ltd and Next Distribution Ltd v Thandi and others [2026] EAT 130, Employment Appeal Tribunal, 7 September 2026. The EAT allowed Next’s appeal to the extent set out in the judgment and dismissed the employees’ cross-appeal; further submissions on disposal and consequential matters were to follow. (Tribunal Database)
