Employers are being 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. As an employer you could face a similar negative reaction if you attempt to alter terms and conditions as a result of the law to increase salaries for your lowest paid staff. The £7.20 an hour wage came into force on Friday 1 April.
As part of the change, the B&Q employees say that the retailer has suggested 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% of annual salary.
The petition says that 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 benefitting from allowances for a long time when others have not, and that can’t continue.”
A survey from the Federation of Small Business found that 54% of SMEs believe they have been negatively impacted by the 50p an hour increase in pay, and will put off hiring new staff as a result. 41% will cut staff hours, while 26% plan to erode pay differentials by freezing or cutting the wages of higher paid staff.
According to analysis by the FT, employers are actively 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.”
Before you make any major decisions which could affect your business and your employees, get in touch by contacting us on 0118 940 3032 or emailing sueferguson@optionshr.co.uk.