Since the introduction of the national living wage on 1 April 2016, a number of employers have been accused of cutting employee benefits to offset its cost. Workers aged 25 and over are now entitled to at least £7.20 per hour; those under 25 must continue to receive the national minimum wage.
A well known high street restaurant chain has now been accused of replacing free-food allowances with a cut-price menu, as well as reducing the amount of tips passed on to waiting staff. Since 4 April 2016, waiting staff have received 50% of tips from customers with the rest being shared between kitchen staff and supervisors. Previously, this was 70%. The Company denies that these changes are related to the introduction of the national living wage. A spokesperson suggested that they have supported the introduction of the national living wage from the outset, underpinned by a belief that the Company’s employees are an essential part of its business who should be rewarded fairly.
In another case an employer has allegedly paid for the national living wage by cutting overtime and weekend rates, with staff who refuse to enter into new contracts threatened with dismissal.
These examples highlight potential “flash points” between employers and employees resulting from the introduction of the national living wage, with the potential for contract disputes to arise.
Where employers are considering making changes to employment contracts, for reasons relating to the introduction of the national living wage or any other, it is important they seek legal advice from an employment lawyer, so as to ensure they follow correct procedure and avoid giving rise to potential claims from employees.
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