Next ruling heralds employment law headache
The Employment Tribunal accepted that the difference in pay rates between Next’s shop floor staff and their warehouse-based colleagues was not down to “direct discrimination” or the “conscious or subconscious influence of gender” on pay decisions.
Why, then, did the retailer lose the claim brought by store staff? The answer concerns the much thornier issue of whether roles are deemed to be of “equal value”.
Next argued that in the wider labour market rates of pay for warehouse workers are higher than for shop-floor workers, and so they pay their warehouse workers more.
There could be any number of reasons why warehouse workers tend to command higher wages; the work could be more physically demanding, less social, more dangerous or harder to get to.
Whatever the reason, the market’s hidden hand has had its say and Next (along with many other retailers, large and small) acted accordingly, offering rates of pay deemed necessary to attract and retain staff in particular roles or under particular conditions.
In a free market, an individual is free to take their labour elsewhere in pursuit of higher pay.
Indeed, given that only 52.75 per cent of Next’s warehouse operators are male there are clearly plenty of women who have done just that. But the “equal value” test distorts market forces and removes an employer’s ability to take into account intangibles when setting pay.
When it comes to the lower rates of pay offered to Next’s shop-floor employees, the claimants’ barrister said that “[The tribunal] rightly found that Next could have afforded to pay a higher rate but chose not to and that the reason for that was purely financial.”
This assertion is deliberately provocative (should an employer be compelled to offer higher rates of pay if it can be demonstrated by the state that they could “afford” to do so?) but it does reflect the emerging and contentious reality that an employers’ ability to set different rates of pay across their operations is being eroded by ever more layers of employment law.
The implications of the tribunal’s ruling are potentially profound and while Next, which is appealing the decision, points out that “this is the first equal pay group action in the private sector to reach a decision at tribunal level” it’s unlikely to be the last.