Retailer Next warned that the viability of its warehouse operations had been left in doubt following an employment tribunal ruling that found it should pay thousands of shop staff the same as its warehouse workers.
It had argued that the different pay rates were due to market forces being driven by the wider labour market and that the difficulties in recruiting and retaining warehouse workers meant they required higher pay than its shop staff.
But an employment tribunal ruled that Next had failed to show that paying their sales consultants, who were overwhelmingly women, less than their warehouse operatives, was not sex discrimination.
In its latest set of results, for the six months to July, Next said its legal team was very confident of its grounds for appeal, but that the process could take at least a year to resolve.
It added that if it lost the case then there would be “a financial cost to the group and its ongoing future operating costs.”
Next said each of its stores was treated as a business in its own right and must remain individually profitable if they were to open in the first place and continue trading: “Inevitably, some of our stores will no longer be viable if this ruling is upheld on appeal,” it told investors.
“An additional concern is the effect the case would have on the viability of our warehouse operation,” it added.
“If, for many people, warehouse work is less attractive than work in stores - as the evidence before the tribunal showed - how can a warehouse attract the number of employees it needs?
“On the tribunal’s approach, the warehouse cannot raise wages, as that must inevitably push up the pay of competing work in shops - a vicious circle.”
The law firm that represented the shop workers has estimated the case could cost Next £30m in back pay.
