Tesco set to face legal dispute over pay cuts
Following on the heels of the junior doctors’ dispute and ‘Marmitegate’, we now have news of a pay dispute between Tesco and some of its long-standing employees who are unhappy at proposals to reduce rates of pay for unsociable hours worked on weekends, nightshifts and bank holidays.
Whilst Tesco is reported to have announced a pay increase of up to 3.1% for its staff as part of pay negotiations it proposed to simplify premium payments to ensure a fair and consistent approach for all colleagues. Employees who benefited from increased rates paid for unsociable hours assert that these changes will unfairly hit loyal, long-serving employees unfairly.
However, the proposals announced by Tesco are unsurprising and reflect our changing society, particularly lifestyle and legislative changes which have impacted upon retail employers, particularly large supermarkets.
First, the National Living Wage introduced in April 2016 resulted in a rise of 7.5% in the hourly pay of employees aged 25% and over. In a time of zero inflation and amid rising food costs, demonstrated by Marmitegate, it is unsurprising employers will seek to reduce overall staff costs by other means.
Second, society’s move to an increasingly 24/7 culture inevitably leads to a need to review what unsociable hours are. This is accompanied by an increasingly flexible workforce, in which more people are willing to work the hours that may previously have been hard to fill.
Third, the challenges of calculating holiday pay, following recent case law concerning overtime and commission payments, and the new gender pay reporting requirement is likely to make employers across the board keen to simplify and standardise their pay arrangements.
We are likely to therefore see more employers seeking to change their pay arrangements, and in most cases, provided a fair procedure is followed employees should find it difficult to challenge those changes. Employers will need to ensure that before seeking to implement such proposals they document their business rationale, conduct an impact assessment to highlight any disproportionate impact the changes may have on particular categories of employees, and carry out effective consultation. Final proposals should only be enforced where there is a contractual right to do so, or with consent, which should be achievable where the changes are accompanied by an increase in pay for other hours worked and/or benefits.
The content of this article is for general information only. For further information regarding employment payment disputes, please contact Abigail Trencher or another member of Birketts’ Employment Team. Law covered as at October 2016.