Employers are warned to avoid ‘kneejerk moves’ when introducing measures to offset increased wage costs
A petition drafted by a B&Q manager, accusing the DIY retailer of slashing employee benefits in an effort to offset the costs of the national living wage (NLW), has so far attracted more than 120,000 signatures – and has led to warnings that employers could face a negative reaction if they attempt to alter terms and conditions at the same time as they are forced to raise salaries for the lowest-paid. The £7.20 an hour wage comes into force on Friday 1 April.
As part of the change.org petition, the B&Q employee says the retailer has suggested removing time-and-a-half pay for working Sundays and double time for working bank holidays; a restructuring of allowances for employees working in parts of the UK where the cost of living is higher; and the removal of a summer and winter bonus, which equates to 6 per cent of annual salary.
The petition says B&Q staff are required to accept the new terms and conditions of employment, or face losing their job.
“Big businesses like B&Q are using the NLW as an excuse to cut overall pay and rewards for the people who need it the most,” the petition reads.
B&Q denies that the changes to terms and conditions are as a result of the NLW, stating that a review of its pay and reward framework was launched “long before” the new wage was announced.
A B&Q spokesman said: “Our aim is to reward all of our people fairly so that employees who are doing the same job receive the same pay. That isn’t the case at the moment, as some have been benefiting from allowances for a long time when others have not, and that can’t continue.”
In an effort to offset the increased cost of salaries, Manpower Group suggested that employers have considered “reducing pay for overtime and bank holidays or to flatten their structures and reduce the number of better-paid supervisory roles”.
A survey from the Federation of Small Businesses found that just over half (54 per cent) of SMEs believe they will be negatively impacted by the 50p an hour increase in pay, and will put off hiring new staff as a result, while 41 per cent will cut staff hours. Just over a quarter (26 per cent) plan on eroding pay differentials by freezing or cutting the wages of higher-paid staff.
Chris Rowley, professor of HR at Cass Business School, said there was “no point in backward-looking, short-term, kneejerk moves” in response to the NLW. “They are a mistake on several grounds, as these are retrograde strategies and tactics and will have long-term consequences.
“Worryingly, some firms have already considered cutting benefits and perks, taking on younger workers, using apprenticeships and self-employment as convenient fig-leaves.”
He said many organisations had taken legal advice and were deploying a “zero-cost, profits and costs mitigation approach to the NLW”.
“Tesco and Wilko have also cut some premiums and benefits while raising base pay,” he added.
According to analysis by the FT, employers are actively considering increasing the number of self-employed individuals or apprentices – all of whom are exempt from the NLW – in their staffing mix.
But Esther Smith, employment partner at UK law firm TLT, warned that this could leave employers open to discrimination claims.
“Employers may, consciously or unconsciously, look to employ younger people to avoid the higher wage costs. Also, if they operate zero hours contracts, they may elect to offer less work to those people over 25,” she said. “Both of these actions would expose the employer to age discrimination claims.”
Story via – http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2016/03/31/staff-accuse-b-amp-q-of-using-national-living-wage-as-excuse-to-cut-pay-and-benefits.aspx