Workers invited to trade paid breaks and bank holidays for higher hourly rate; experts say more employers may revise contracts to cope with NLW increases
Supermarket giant Asda is offering employees flexible contracts with a requirement to work over bank holidays and take unpaid breaks in exchange for higher pay.
Under the new contracts – where staff will earn £8.50 an hour (£1 more than the increased national living wage (NLW) rate set to be implemented in April) – employees can work on different days and shifts, depending on their personal circumstances.
Unsociable hours, which currently run between 10pm and 6am, will be changed to between midnight and 5am. Staff working these hours will be paid an additional £2.54 an hour instead of the current £2.04. Asda estimates that 95 per cent of current staff will be better off under the new terms.
But despite the GMB union approving the contracts, and Asda insisting they are voluntary rather than zero-hours, there are concerns that organisations are turning to new contracts to mitigate the NLW increase.
People Management reported last year that some organisations were responding to the NLW rises by cutting overtime rates, reducing premiums for weekend or evening work or cutting perks– a concern backed up by a Dispatches investigation that revealed many larger employers, such as Pennine Foods and B&Q, were cutting premium payments that included overtime and holiday pay rates.
At the time, Alan Price, chief executive of HR consultancy Croner HR, told People Management there had been a “sudden spike” in calls from employers that appeared to be targeting the over-25s for redundancy.
“It might just be anecdotal but we don't normally at this time of year see a spike in redundancy calls… but the only real change in business models pre-Brexit was the NLW so you can more or less time it exactly to the beginning of April [2016], when it was implemented,” he said.
Research by the British Chambers of Commerce (BCC) showed that the “sharp increases” in the NLW would cause many companies to implement cost-reduction measures, such as cutting recruitment and staff hours or increasing prices of goods and services, said Mike Spencer, the BCC’s director of research and economics – particularly as “myriad other upfront costs” such as business rates, insurance premium tax and the new apprenticeship levy were putting financial pressure on organisations.
But Andrew Weir, employer services manager at HR and payroll firm Moorepay, described Asda’s measures as “sensible” and urged other employers to follow suit, provided legal minimums – such as provision for adequate rest breaks – aren’t breached.
Sarah Peacock, partner in the employment team at law firm Blake Morgan, said it was “not surprising” that some employers were looking to mitigate the detrimental effects of the NLW, particularly as the increase would have a “knock-on” effect on national insurance contributions and pensions auto-enrolment. At the same time, she felt it was likely that organisations were learning how to make changes to benefit the employer and employee alike.
She told People Management: “There was a lot of publicity when the NLW was introduced about employers that were changing terms and conditions to minimise the detrimental impact on their business, leaving some employees no better off. It may be that employers like Asda are now taking a long-term view to make sure that they can offer well above the NLW while achieving benefits for the business.”
Meanwhile, Katherine Chapman, director of the Living Wage Foundation, said retailers such as Ikea, Lush and Majestic Wines were already paying staff the real living wage – £8.45 in the UK and £9.75 in London – and called on Asda to do the same.