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Employers not to cut staff benefits to fund National Living Wage
25/04/2016

The new National Living Wage (NLW) came into force on 1 April 2016 and it entitles workers aged 25 and over to a minimum wage of £7.20 per hour. However, it would appear that a number of businesses have withdrawn staff benefits and perks, such as free food and higher overtime pay, to mitigate the impact of the NLW. For example, Waitrose has ceased paying higher hourly rates for overtime or Sunday working for new workers, Caffe Nero has stopped giving staff free lunches, Tesco is shortly to reduce overtime rates for working Sundays and some Carillion cleaning staff are facing reductions in their working hours. Waitrose has, however, stated their move is unrelated to the NLW and was planned last year and Tesco is apparently to pay staff a lump sum to cover 18 months of the pay difference.

The Chancellor George Osborne has now warned employers who cut staff benefits to pay for the NLW that they are not acting within the spirit of the law and should abide by their responsibilities and Nick Boles, Minister of State for Skills, has requested his fellow MPs to let him know of any profitable businesses that are trying to evade the spirit of the legislation in an unreasonable way. Nick Boles stated that he would use the full force of his government department to put pressure on those businesses to live up not only to their legal obligations but also to their moral obligations.

However, unless the government takes steps to introduce financial penalties for employers that deliberately circumvent the NLW in this way, or it extends the current naming and shaming scheme to this type of action, staff benefits are generally a contractual matter between an employer and its workers.

The government is to increase the HMRC’s NMW/NLW enforcement budget in 2016/17 from £13 million to £20 million.


 

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