Next store workers have won a six-year legal battle for equal pay in a landmark case that could force the retailer to pay more than £30 million in compensation and underpin similar claims against major UK supermarkets.

The employment tribunal’s decision benefits 3,540 plaintiffs who had accused Next of paying its retail staff – most of whom are women – lower hourly wages than its warehouse workers, most of whom are men.

Next – which operates 466 stores across the UK – had argued that the difference in pay for the two roles was based on the “market rate” for each role and reflected the need to recruit and retain warehouse staff around the clock, including for night shifts and Sundays and bank holidays. The retailer said the pay had been set to ensure the “viability” of the business.

The court acknowledged that the decisions were driven by efforts to cut costs and increase profits. It also acknowledged that the discrepancy was not due to “direct discrimination” on the grounds of sex, as “there was no conscious or unconscious influence of sex on the way Next set salaries”.

Ultimately, however, the court ruled that the retailer failed to prove that the lower pay was not the result of gender discrimination. Financial decisions could not be used as a blanket argument against equal pay.

“Using market forces as a trump card in this way would run counter to the aim of the legislation; lower wages in certain sectors due to indirectly discriminatory practices could then be lawfully maintained indefinitely,” the ruling states. “As a rule, there must be a more compelling commercial reason for such agreements to be justified.”

Next announced that it would appeal the ruling.

The Next case, which covered the period from 2012 to 2023, explained that women made up nearly 78% of retail sales staff, while men made up about 53% of warehouse staff. During that time, some warehouse staff were able to earn between 40p and £3 more per hour than retail sales staff, said Leigh Day, the law firm representing the workers.

While the judgment also took into account that retail employees had access to amenities not available to warehouse employees, it found that the “idyllic portrayal of the benefits of a sales associate’s workday versus the grim endurance of a warehouse worker painted in the defendants’ written submissions was something of a parody.”

Elizabeth George, a partner at Leigh Day and a lawyer representing the plaintiffs, said the ruling was “hugely significant” and the case involved “exactly the kind of pay discrimination that equal pay legislation is designed to address”.

The court will decide on compensation and back pay, which could amount to up to six years. Hourly wages will also be equalized in the current contract, and employees will also receive paid rest breaks and the same wages for Sunday, night and overtime shifts as warehouse employees are entitled to.

Leigh Day said this could force Next to pay more than £30 million in total.

Next reported annual pre-tax profits of £918 million for 2023, up 5% from the previous year.

Next announced it would appeal the ruling. “In relation to the specific circumstances in which the claim was successful, we intend to appeal. This is the first private sector class action to have reached a decision at the court level and raises a number of important legal principles,” the retailer said in a statement.

Leigh Day said this was the first successful equal pay case of its kind against a national UK retailer and is likely to set a precedent for similar cases the firm’s lawyers are currently pursuing against the major supermarkets.

More than 112,000 store workers have brought “similar equal pay claims” against Asda, Tesco, Sainsbury’s, Morrisons and Co-op through Leigh Day. Lawyers at the court said they expected Next’s ruling “would be closely scrutinised by all the retail heavyweights. The court has made it clear that relying on market price is not in itself a valid defence in equal pay claims of this nature.”

Leigh Day added: “Each case will be decided on its own particular circumstances, but the success of Next’s staff will be a huge encouragement to all of these cases.”