Next warned it may be forced to shut down stores following a legal victory over equal pay. The retailer is expected to lose more than £30million after the landmark case. In a recent report, the FTSE 100 clothing chain and homewares company said that the Equal Pay ruling could have an impact on whether or not stores are “individually profitable”.
A tribunal of employment ruled last month that 3,540 current and former employees at the high-street retailer, most of whom are women , should not have received lower pay than its warehouse workers, who tend to be men. Next has filed an appeal in response to a ruling that dates back to October of 2018. Next’s legal team said it was “very confident” of its grounds for appeal, but added that court proceedings could take over a year.
The August ruling was the first of its kind to be made against a British retailer, and it is expected that this will pave the road for future claims. A similar claim for equal pay is being pursued by more than 60,000 Asda workers at an employment tribunal. The decision should be made early next year. Next published its half-year report on Thursday, which outlined the possible consequences of the decision.
It said that “inevitably, some of our shops will no longer viable if the ruling is upheld in an appeal.” The company said that “materially increasing operating costs of stores will lead to more shops closing when their leases end and will materially hinder our ability to open up new stores in the future.”
Next said that it was concerned about the impact of the case on the viability and profitability of its warehouse operations. It would not be able to raise wages in stores without raising them at the same time. Lord Wolfson, chief executive officer of Next, however, stated: “We do not threaten to take any action.” It was just pointing to the reality of new store openings and closings.
The profitability of each store will determine whether we open new stores or close existing ones. You would never expect to see a retailer open a shop that was not planned to be profitable. Next has 458 shops in the UK, with its headquarters located near Leicester.
Wolfson said that over the last decade, the UK high street has seen a number of stores close. Wolfson stated that “we’ve seen a large number of stores closing over the past seven to ten year period, as their costs increased due to falling sales.”
The reality of retail is that, in the past ten years, we have all had to make difficult decisions. We either did not move our shops to a new location, we didn’t open new shops that we wanted to, or we closed profitable shops.
Wolfson, before the Labour Employment Rights Bill was released, said that it did not seem right to him that people had to wait for two years to get various rights. However, he warned against making further comments until all the details were known.
Wolfson said that Next does not employ workers under zero-hour contracts. It offered extra hours to its employees in order to fill the additional staffing requirements during Christmas.
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