Selected cases

Employment Appeal Tribunal · [2026] EAT 130

Next Retail Limited and another v M Thandi and others

Next partly succeeded in its appeal from the equal pay decision. Formal disposal and consequential matters were reserved for further submissions.

Employment Appeal Tribunal7 Sept 2026

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Quick read

  • The decision is narrow and fact specific.
  • Next partly succeeded in its appeal from the equal pay decision.

Use this to check

  • This appeal followed an earlier ruling that the store roles and named warehouse roles were of equal value.
  • The EAT kept the tribunal's finding that the pay factors put the mainly female retail group at a particular disadvantage.
  • The claimants lost their cross-appeal on direct discrimination.

Decision snapshot

  1. What happened

    • In 2018, 3,540 retail sales consultants working in Next stores brought equal pay claims.
    • They compared themselves with warehouse operatives in Next's warehouses.
    • In a separate 2023 ruling, the same Employment Tribunal had already decided that the work of three lead claimants was of equal value to that of four named warehouse comparators, and that finding was binding.
    • The later hearing concerned Next's material factor defence under section 69 of the Equality Act 2010 for the period 2012 to 2023.

  2. What the court had to decide

    • After equal value and lower pay were established, section 69 required a staged analysis.
    • Next first had to show that each difference was because of a material factor and that relying on it did not involve direct sex discrimination under section 69(1)(a).

  3. What the court decided

    • Next's appeal succeeded in part.
    • The EAT upheld the tribunal's finding of particular disadvantage and dismissed the claimants' cross-appeal on direct discrimination.
    • Final disposal and consequential orders were left for later submissions.

Practical impact

Practical read

  • The decision is narrow and fact specific.
  • The EAT did not create a general market-rates defence.
  • It held that, on the tribunal's own findings, the higher warehouse basic pay pursued a legitimate recruitment and retention aim that did not apply in the same way to the retail claimants.
  • The evidence the tribunal had accepted included greater warehouse recruitment spending, agency use, recruitment from EU countries, financial incentives and the risk to warehouse service if pay were reduced.

Useful next steps

  • This appeal followed an earlier ruling that the store roles and named warehouse roles were of equal value.
  • The EAT kept the tribunal's finding that the pay factors put the mainly female retail group at a particular disadvantage.
  • The claimants lost their cross-appeal on direct discrimination.
  • Next succeeded on the main basic pay issue because the EAT said the tribunal should have focused on the reasons for higher warehouse pay, not on affordability of raising retail pay.
  • On the tribunal's own findings, higher warehouse basic pay was justified in this case by recruitment and retention needs.

How the dispute reached the EAT

Next Retail Limited and Next Distribution Limited appealed against Miss M Thandi and 3,539 other retail claimants in Next Retail Limited and another v M Thandi and others [2026] EAT 130, case EA-2024-001280-KSD.

Mr Justice Bourne heard the appeal on 16 and 17 June 2026 and handed down judgment on 7 September 2026. It concerned a Leeds Employment Tribunal decision sent to the parties on 22 August 2024.

Before this appeal, the tribunal had already ruled that the lead store roles were of equal value to named warehouse roles. The later decision considered Next's material factor defence across 20 pay terms or categories.

Key points

  • Retail sales consultants were predominantly female.
  • Warehouse operatives were closer to an even gender split, with a slight male majority overall.
  • The basic hourly pay gap narrowed from 92p in 2012 to 38p in 2023.

Why Next won on the key basic pay issue

The EAT said the tribunal approached basic pay the wrong way round. It focused on why retail staff were not paid more and whether Next could afford to raise their pay.

The correct question was why warehouse staff were paid more. On the tribunal's own findings, Next needed higher warehouse pay to recruit and retain enough staff and could not cut that pay without risking warehouse service. Those pressures did not apply in the same way to retail staff.

How the other pay terms were decided

The EAT reviewed the challenged terms one by one rather than applying a single answer across the whole case. That mattered because some differences were linked to warehouse recruitment or collective bargaining, while others were treated as retail cost-saving changes.

Key points

  • Unconsolidated awards: the EAT held that the tribunal's adverse ruling against Next could not stand. Formal disposal was left for later submissions.
  • Sunday premium: the EAT found an error in the tribunal's reasoning, but did not finally determine that term in this judgment.
  • Night time premium: the appeal failed, so the finding against Next remained.
  • Overtime premium: the appeal failed.
  • Paid rest breaks: the appeal failed.
  • Long service awards: the EAT held that the tribunal's adverse ruling against Next could not stand. Formal disposal was left for later submissions.

Why the evidence mattered

The EAT's conclusion on basic pay used the Employment Tribunal's own findings about the reason for the higher warehouse rate. It did not accept market forces as an automatic answer.

The judgment records several kinds of evidence behind those findings. They showed a recruitment and retention problem in the warehouse operation that did not apply in the same way to retail.

Key points

  • Next spent substantially more on warehouse recruitment
  • Agency workers supplied part of the warehouse labour
  • Warehouse recruitment extended to EU countries and experienced attrition
  • Financial incentives were introduced to support warehouse recruitment
  • The tribunal found warehouse service would be at risk if the higher rate was reduced
  • A separate USDAW bargaining process explained some warehouse terms

Common questions

Does this decision mean employers can always rely on market rates to justify a pay gap?

No. The EAT repeated that justification is fact specific. Market forces can justify all or part of a pay difference in some cases, but only on the facts and evidence of the particular case. Here, the important findings were about warehouse recruitment and retention, agency use, incentives and the risk to service if warehouse pay fell. The judgment does not create a general market-rates defence.

Did Next finally win the whole equal pay case?

No. The EAT overturned the tribunal's main ruling on basic pay, held that the tribunal's adverse rulings on unconsolidated awards and long service awards could not stand, and found an error in the Sunday premium reasoning. But other adverse findings remained, including night time premium, overtime premium and paid rest breaks. The claimants also kept the finding of particular disadvantage, even though their cross-appeal on direct discrimination failed. Final disposal and consequential orders were left for later submissions.

Why did the direct discrimination argument fail?

The EAT said direct discrimination under section 69(1)(a) still depends on whether Next treated the claimants less favourably because of sex. It rejected the argument that direct discrimination must automatically be found whenever an employer relies on market forces without proving those market forces are gender neutral. The tribunal had been entitled to find, on the evidence it accepted, that Next's pay decisions were driven by cost and operational reasons rather than sex. The EAT also said there was a sufficient evidential basis for those findings even though no board member gave evidence.

Why did basic pay turn out differently from some other benefits?

Because the EAT thought the tribunal made a specific legal mistake on basic pay. The tribunal looked too much at the lower retail rate and at whether Next could afford to raise it. The EAT said the right focus was the higher warehouse rate and the reasons for it. By contrast, on some other terms, especially the retail night time premium change and paid rest breaks, the tribunal was entitled to treat the difference as flowing from cost-saving changes affecting the retail group. The result therefore varied term by term.

What evidence mattered most to the appeal result?

The most important findings were that warehouse labour involved greater recruitment pressure, more recruitment spending, agency reliance and incentives, and that Next could not reduce warehouse basic pay without risking the required warehouse service. The separate USDAW bargaining process also mattered for some terms. On the cross-appeal, the EAT accepted that the tribunal could rely on inferential evidence from a senior HR witness who had been centrally involved in retail pay setting, even though no board member gave evidence.

Related topics

Employment & WorkplaceRegulatory ComplianceDismissal, Redundancy & GrievancesDirectors' Duties & GovernanceDisputes, Enforcement & RemediesEquality, Discrimination & AccessibilityUnions, Collective Bargaining & Industrial Action

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Update history

Case7 Sept 2026

Next partly succeeds in equal-pay appeal

The EAT overturned the tribunal's approach to basic pay, kept the finding of particular disadvantage and dismissed the direct discrimination cross-appeal.