Next: Closures on the horizon if court rejects appeal. What is in store for the retail giant?
Fashion retailer Next lost a major legal battle last month over unequal pay in its UK operations. Now, it has been revealed that if it loses its appeal, it will have to close some of its stores.
So what happened?
In August, the Employment Tribunal ruled that the company had failed to show paying its sales consultants, most of whom are women, lower hourly pay rates than staff in its warehouses, which are male dominated, was not sex discrimination.
As a result, Next could be forced to pay out as much as £30m, according to law firm Leigh Day, which brought the claim against Next on behalf of 3,500 current and former staff.
Next has lodged an appeal against this ruling.
On Thursday in its half-year results, Next’s chief executive Simon Wolfson, told investors that “in the possible (but unlikely) event we lose this case on appeal, there will be a financial cost to the group and its ongoing future operating costs.”
He noted that “inevitably, some of our stores will no longer be viable if this ruling is upheld on appeal.”
Wolfson did add that “this is certainly not a threat.”
“We are pointing out the reality of store openings and closures. It is about the costs of the business going up relative to sales,” he added.
While all eyes will be on this appeal, there are also similar claims facing Asda, Tesco, Sainsbury’s, Morrisons and Co-op behalf of a total of 112,000 staff.
What is next for the group?
Andy Williams, employment partner at Stevens & Bolton told City PM, “should any appeal not be successful, with an expected compensation bill of £30m and a payroll that is about to get quite a lot more expensive for Next, we can expect to see some major changes at the retailer.”
If the appeal doesn’t go Next’s way Williams noted that “it is likely that the in store staff may be subject to redundancies or hiring freezes, resulting in a leaner in store workforce.”
He noted that “whilst Next has promised to appeal the decision, the grounds for any appeal are not clear.”
Williams pointed out that “given the imminent expected legislation from the UK government increasing workers’ rights in various ways, there is a current social trend towards not allowing any appeal to succeed.”
He did note that “each case is decided on its own facts”
However, the “government’s proposals include bolstering gender pay gap reporting and mandating large employers to develop action plans to close their gender pay gaps. Where employers fail to achieve this, it looks like an open goal for workers who are not being paid fairly.”