Business

National Living Wage: 'We are losing out'

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Media captionSome firms are cutting overtime payments or staff perks to offset the extra costs of the National Living Wage

When workers at the Seachill fish factory in Grimsby first heard about George Osborne's National Living Wage they were very happy.

"I thought it was great, fantastic," says Tom, one of the 450 or so full-time workers who work shifts preparing and packaging chilled fish destined for the supermarket shelves.

Tom is not his real name. He's too scared of revealing his true identity for fear of losing his job.

His employer is about to impose new terms and conditions and the workers aren't happy.

"The workforce are up in arms about it. Everybody is really really annoyed with the company the way they've done things... we feel as though they're robbing us," he says.

Compulsory overtime

On 1 April, the government increased the minimum wage from £6.70 to £7.20 an hour for workers aged 25 and over.

Image caption Tom reckons he will earn up to £80 a month less than he was expecting

Seachill relies on overtime to keep its conveyor belts running. It's a requirement written into staff contracts.

On top of a 40-hour week, Tom says workers can end up doing another 20 hours, especially when there's a big order to complete.

His employer wants to increase the basic rate of pay to £7.35 an hour but cut overtime payments..

Tom reckons he will earn up to £80 a month less than he was expecting.

Workers have to decide whether to accept the new contracts or risk losing their jobs.

"Even with the new rate they've offered us at £7.35 an hour, at time and a quarter, it's less than what they would've been paying us at £7.20 an hour and time and a half and double time.

"We are losing out big style," he says.

Image caption Seachill says most workers will be better off

The company is part of the Icelandic Group. It made more than £8m in profit last year. In a statement, it says its changes are designed to make it more efficient and says most workers will be better off.

Tom disagrees and says he's 100% certain the changes are being made to help offset the costs of the new National Living Wage.

"It's not on. As far as all of us are concerned, it's not on. How can they say in one breath that the firm is doing really well, and then expect us to take a pay cut?"

Changing pay

Seachill is not the only company that's been reviewing its pay arrangements.

Image caption Caffe Nero recently withdraw its free panini policy to staff

At Pennine Foods in Sheffield, owned by the huge food group, 2 Sisters, workers have voted for strike action after the company announced it would cut Sunday and bank holiday pay as part of plans to standardise payments to staff.

Elsewhere, staff benefits are also being trimmed. At Caffe Nero, workers are no longer entitled to a free panini whilst staff at Eat will no longer have paid-for breaks.

Wage 'excuse'

In a recent parliamentary debate on the issue, both companies along with some other household names were in the firing line from MPs; DIY chain B&Q came in for particular criticism.

"Companies such as B&Q use the introduction of the national living wage to 'reform their pay and reward structures', as they put it. That is a euphemism for cutting staff pay," said Joan Ryan, Labour MP for Enfield North.

"I have found disturbing and, quite frankly, shameful the way in which some large employers in the service sector have used the introduction of a living wage as an excuse to cut basic work entitlements," added Julie Cooper, Labour MP for Burnley and Padiham.

Image caption Some companies' pay reforms are "a euphemism for cutting staff pay", says Labour MP Joan Ryan

More than 130,000 people signed a petition against B&Q's planned cuts to employee benefits. It announced in February that it would be cutting Sunday pay and reducing bank holiday pay and bonuses for some staff, although it raised its basic pay to £7.66 an hour in April.

B&Q said many workers would be better off or unaffected by its changes but that it had now extended compensation to staff who would lose out.

Caffe Nero said its workers would still get a discount for food. Eat said all employees would be compensated through a pay rate above the current national living wage.

Cost pressures

In the last year, Morrisons, Tesco and Waitrose have also altered payments but they all insisted that it wasn't anything to do with the introduction of the national living wage.

Some aren't surprised that employers are having to make changes.

"Increasing the national living wage was the right thing to do but no-one can doubt that there will have to be adjustments," says Simon Walker, the boss of the Institute of Directors.

Image caption More than 130,000 people signed a petition against B&Q's planned cuts to employee benefits

"Companies have to be profitable so they are going to have to make adjustments and cut backs if they have to pay higher wages in order to break even.

"They also face a number of other cost increases including the apprenticeship levy and auto enrolment for pensions."

The chancellor cut corporation tax to help ease the burden on employers. He's called on companies to follow the spirit of the law.

The owners of Seachill say it has a very loyal, long serving workforce and ensuring that they were fairly rewarded, whilst continuing to provide a first class service to its customers, is a priority.

But for Tom and many of his colleagues, the cuts to overtime are proving hard to swallow.

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