National Living Wage Brings Reduction in Job Perks

By Sam Thomas | 1st June 2016 | 14 min read

BLOG | Employees now receiving the new National Living Wage are reporting that their employer has reduced the amount of staff 'perks' they get as a result



Perks of the Job

Businesses across the UK are cutting certain staff benefits to offset the cost of the Government’s new National Living Wage, in place since April 2016. Companies such as B&Q, Waitrose and Zizzi have “redistributed” some of the benefits their employees receive to help pay the additional 50p per hour their over 25 employees now earn.

B&Q have faced a backlash on social media, with a petition calling on them to reverse cuts to staff benefits and perks now having over 130,000 signatures.

The National Living Wage means every worker over the age of 25 must be paid at least £7.20 per hour, while those under 25 will be paid the current rate of the National Minimum Wage. This currently stands at £6.70 between ages 21 to 24, £5.30 between 18 and 20, £3.87 for under-18s, and for apprentices the figure is £3.30.

The Chancellor’s View

Chancellor George Osbourne has stated that companies doing this were ‘not acting within the spirit of the law’. Benefits which have been cut include Sunday pay, free or reduced-cost food and drink, family discounts, and overtime.

George Osbourne told ITV that companies cutting staff perks made him angry, and he had this to say; “we will enforce the letter of the law but we want companies to also live by the spirit of the law, but of course what you get is some companies cutting the lunch break, or cutting the free lunch they were providing.

“I think that companies these days should be much more careful about their reputation and much more aware of their social responsibility to their workforce as well as to their community.”

Some companies who are not reducing staff perks are instead raising their prices to combat the National Living Wage; others are lobbying for tax reductions and some have reported an increase is staff efficiency and productivity and because of this they have taken no action.

What to do Next

The route your business will take to react to the Living Wage is your decision, by law all you have to do is pay your eligible staff the additional 50p per hour, what your business does in order to do this is your decision. Also, ensure that your payroll software is capable of managing and processing the changes.

What do you think of the National Living Wage’s introduction?

Our recent guide, “Top 5 Payroll Issues of 2016” featured the National Living Wage as a key issue businesses will face this year, along with others such as automatic pension enrolment and zero-hour contracts.

Download the free 10-page guide today and see how your business can prepare for the changes and how IRIS can help.

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