National Living Wage (NLW): effect on pay perks


The growing row over companies reducing employee perks to fund the cost of the new National Living Wage (NLW) is to be pushed further into the spotlight by a debate in Parliament today.

The debate comes as workers across the country are seeing their perks and pay rates cut as companies try to offset the cost of the new NLW.  

Some employers, including B&Q, have cut pay for unsociable hours, abolished the London Weighting Allowance and scrapped summer and winter bonuses.

Some supermarkets, including Waitrose, Tesco and Morrisons, have also reduced their Sunday and overtime pay while Eat, the sandwich chain, has cut pay during lunch breaks.

The debate in Parliament today was called by Siobhain McDonagh, MP for Mitcham and Morden, as a constituent who works in B&Q reported that a rise in basic pay was being followed by cuts to Sunday and holiday pay.

Ms McDonagh has been campaigning on the issue and has been granted a debate in the Commons following a successful bid via the Backbench Business Committee that gained cross-party support.

The MP is arguing that the government should look at preventing businesses offsetting the cost of the NLW by reducing perks. That could include insisting that staff are paid for the legally required 20 minute break in a six hour shift.

Along with the NLW, Chancellor George Osborne announced a cut in Corporation Tax to help companies afford it. Corporation Tax will fall to 17% by 2020 giving businesses a £15 billion tax break.

‘This loop-hole must be closed’

Siobhain McDonagh, MP said: “If business is getting £15 billion, the people who help them make their profits deserve a bit of that.

“If the Government’s plan was to ensure that workers will get a pay rise then it is morally indefensible that staff should end up being paid less. This loop-hole must be closed. I do not have an ideological problem with corporate tax cuts for companies, but surely this should benefit the very people who work to generate their profits.”

A spokesman for Unite the Union said: “Employers are not getting into the spirit of the National Living Wage. We believe these cuts breach the whole point of the National Living Wage – to give low paid workers a step-up.”

‘We understand and we are sorry’

After an online petition signed by more than 136,000 people, B&Q has offered its staff two years of compensation and promised to continue consultations. But many other workers are facing similar cuts with much less publicity.

A B&Q spokesperson commented: “We understand and are sorry that some of our colleagues feel upset by the changes. This has been a difficult decision for us and our aim has always been to reward all of our people fairly so that employees who are doing the same job receive the same pay.

“No one's base pay is being reduced at all, and we are paying compensation so no one's bonus or benefits will be reduced in the first 12 months. From April 1, 2016 our minimum rate is £7.66.”

What help is available if you are struggling on a low income?

If you are on a low income, there may be benefits, grants or other financial support available to you. The ‘In work - on a low income' section of our website has information about help you might be eligible for, including Working Tax Credit.

You can use our free Benefits Calculator to check your latest welfare benefits entitlements. Even if you have checked your benefit entitlements in the past, it is worth checking again, especially if there has been a change in your circumstances.

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Source: Siobhain McDonagh MP press release - Stores slashing staff Sunday pay and allowances