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‘No excuse’ for companies cutting staff benefits to fund the National Living Wage

Firms which cut staff benefits to pay the National Living Wage will be pressured to fulfil their moral obligations

Conservative frontbencher Nick Boles said there is “simply no excuse” for larger firms seeking to “evade” the impact of the new minimum wage for workers over the age of 25.

Boles said that support has been developed to help businesses cope, although he cautioned against criticism of small firms which do not preserve all benefits immediately given the alternative may result in workers being fired.

He urged MPs to inform the Government of profitable businesses which are trying to “evade the spirit” of the new laws so pressure can be applied upon them.

In a recent Commons debate, MPs highlighted companies including B&Q, Bradgate Bakery, Morrisons, Eat and Cafe Nero, which have responded to the new NLW by developing new terms and conditions for employees.

Labour MP Joan Ryan said some businesses have tried to stop double-time on Sundays and bank holidays, seasonal bonuses and other allowances following the implementation of the Government’s National Living Wage plan to ensure adults aged 25 and over are now paid £7.20 an hour.

Mr Boles said he would not start naming businesses which are failing to maintain existing benefits in the Commons.

Labour’s Siobhain McDonagh (Mitcham and Morden) and Business Minister Anna Soubry were praised for dealing with concerns relating to B&Q, noting the company has shifted its position.

MPs heard B&Q has extended the period of compensation for staff members who were due to lose out from 12 months to 24 months.  They added that their basic hourly rate for all staff is £7.66.

Mr Boles said: “I know other companies will shift their position if the spotlight falls on them.”

He added to MPs: “Please bring to me, to (Ms Soubry) any case of a company who seems to be trying to evade the spirit of this legislation in a way that is unreasonable, a company that is profitable, that will be benefiting from the dramatic cut in corporation tax, a company that will be benefiting from the employer allowance or from the cut in business rates.

“Bring those cases to me and I promise you that we will use the full force of our office, little though it sometimes feels, to put pressure on those companies to live up not only to the legal obligations, which are our job in making legislation in this House, but to their moral obligations, which are the ones that we feel matter a great deal more.”

He added that small employers may find it difficult under the new system.

He said: “I do not want to criticise them for an instant if they are not able immediately to be able to ensure that every aspect of the conditions of an employee are preserved in full.

“Because if the alternative is to actually fire some people then I’d think we’d all agree we’d prefer to have more people being paid the legal national living wage than actually losing their jobs?

“But where I am clear is that for larger employers there is simply no excuse to be trying to evade the effect of the national living wage in increasing people’s earnings by cutting other benefits and other premiums.”

Ms Ryan (Enfield North) said: “Bradgate, like B&Q found an opportunity to save money, so the bakery has changed staff terms and conditions to phase out double pay for Sundays by 2019.

“This means that while employees on national minimum wage earned £13.78 per hour last month, by 2019 they will earn just £9 per hour – that’s the national living wage according to Bradgate Bakery.

“Extra pay for night shifts, Saturdays and overtime are also being scaled back and what this means in sum is that Bradgate workers are being sold a lie, they are told their pay is increasing but what the Government is giving with one hand, Bradgate is taking with another.”

She continued: “There is an industry-wide problem – huge supermarket retailers like Morrisons cut their staff pay back months ago to little media attention.”

Conservative Philip Davies described the national living wage as an “intellectual nonsense” as people face a variation of living costs, dependant on where they live and other influences.

The Shipley MP, who previously worked for Asda, said: “The fact of the matter is that the vast majority of businesses in this country are small and medium-sized enterprises and many of those businesses, and I advise you to go around your constituency, speak to a few shop owners down your local high street, you will actually find that many of those businesses are struggling to earn a living.”

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