Mixed fortunes for workers as companies react in run up to living wage rollout

News Article

Large employers are already reacting to the imminent arrival of the living wage in April, with some already digging deep into their corporate pockets to provide their workers with a better standard or living, whilst others are cutting back on overtime to balance the wages bill.

Tesco, B&Q, Next and Whitbread are some of the multimillion pound firms who have reportedly reduced costs, though many say this is unrelated to the 50p-an-hour hike.

The original £6.70 national minimum wage is set to increase by 50p an hour to £7.20 on April 1st, after the Chancellor announced last July that “Britain deserved a pay rise”.

The initiative, which represents the largest single wage increase since 2009, has reportedly prompted cost-cutting by some large businesses.

Although Tesco is set to pay a higher wage of £7.62 to its workers, it reportedly cut overtime pay six weeks ago by changing from double to one-and-a-half times the usual wage for working Sundays and bank holidays.

Whitbread, meanwhile, which runs Costa and Premier Inn, has said that the new initiative will cost the company £20 million a year. The company has gone further than the minimum legal requirement, by including workers who are under 25, having paid all Costa staff £7.20 since October, regardless of age.

According to a company spokesperson, the same initiative is due to be brought in at Premier Inn, although those under 25 in Whitbread’s restaurants will largely not receive the national living wage.

B&Q, meanwhile, are reportedly offsetting the living wage increase by losing double pay on Sundays and bank holidays.

Many businesses do not appear to have planned for the wage increase in April. According to a government survey, when asked how they plan to offset the increase in staff costs, almost one in five (18 per cent) were still unsure. The majority (51 per cent) claimed they will do so by reducing costs in other areas, with only 6 per cent saying they will turn to funding as a solution.

Lara Murray, an employment law specialist with Palmers said: “The National Living Wage will have a massive impact on businesses large and small. In order to be prepared for this, employers need to ensure that they are fully compliant, whilst at the same time looking at a range of options in order to remain competitive and maintain a healthy cash flow.”

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