Equal Pay risk for UK Retail Sector (Part II)

Research evidence excerpt

Equal Pay risk for UK Retail Sector (Part II)

Sector wide overhang

The UK retail sector is currently facing an unprecedented wave of Equal Pay class

actions. Led primarily by law firm Leigh Day, the “Equal Pay Now” campaign claims to

encompass 120,000 current and former employees across big 4 supermarkets (Tesco,

Sansbury’s, Asda, Morrisons), clothing retailer Next, and Co-op. The central claim asserts

that predominately female retail shop-floor workers perform works of equal value to

their predominately male colleagues in warehouses and distribution centres, but are

systematically underpaid on lower hourly-based salaries. Leigh Day claims the combined

liability to the sector could amount up to £8bn.

The retail industry has been losing ground in this legal process. In Mar-2021, a Supreme

Court ruling against Asda’s appeal effectively stripped retailers of the Phase 1

Compatibility defence, thereby forcing several other supermarkets to concede on this

point. More critically in Aug-2024, Next plc lost a Phase 3 Material Factor Defence, when

the Leeds Employment Tribunal ruled the practice of relying on market rates which

inherently undervalue female-dominated roles constitutes indirect discrimination. Tesco

and Morrisons have both begun Phase 3 hearings in May-2026 (according to Leigh Day

press release), with Asda expected to start in Nov-2026 (according to Asda union GMB).

If retailers ultimately fail to win these liability defences, the UK retail sector could face:

1) material one-off back pay liability, 2) structural labour cost inflation.

Exhibit 1: UK retailers’ Equal Pay exposure

Summary of potential impact (based on claimants) current status

Retailer Next Asda Tesco Morrisons Sainsbury's Co-op