Argos named and shamed among minimum wage offenders

Minimum wage violations: Monsoon tops 'name and shame' list

23 October

The company behind the retail clothing brands Monsoon and Accessorize has topped the latest list of firms that fail to pay staff at least the national minimum wage.

According to the government's third annual "naming and shaming" exercise, Monsoon Accessorize Ltd underpaid around 1,400 of its staff by a total of more than £104,500. It did so by forcing employees to buy discounted clothing to wear at work and then docking the cost from their pay, The Guardian notes.

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Such compulsory expenses breach the rules and effectively reduced pay to below the legal minimum, which rose from £6.50 to £6.70 per hour for over-21s from 1 October.

Monsoon described the breach as "unintentional" and says it has been "working with HMRC in a wide-ranging review of its payroll practices in relation to the national minimum wage". The fashion retailer now offers a clothing allowance to staff and has raised wages. It has also repaid the money owed to staff, but was still given a fine of around £28,000.

A total of 115 companies are on the latest list for having underpaid staff a total of close to £390,000. Most of the employers are smaller businesses that include "hairdressers, a taxi firm, hotels, a nursery school and a funeral director", The Mirror reports. Monsoon is the only larger company on the list, which also features one private company which is a franchisee of the sandwich brand Subway.

The Daily Telegraph says that so far over 400 employers have been named and shamed since the policy was first introduced in October 2013, with total arrears of close to £1.2m and total penalties of over £500,000.

From April of next year, employers will have to pay staff over the age of 25 a higher minimum hourly rate, known as the 'national living wage' of £7.20. This will rise to 60 per cent of median earnings by 2020, when it is expected to be more than £9.

Business minister Nick Boles says that the government is "determined that everyone who is entitled to the national minimum wage receives it" and pledged that the new minimum wage will be enforced "equally robustly".

Minimum wage: will productivity make up for hiring slowdown?

09 October

It's been one of the key underlying themes to the debate on George Osborne's so-called 'national living wage'.

In the next five years the minimum pay rate for over-25s will rise more quickly than it has in the past 16. It will inevitably cost jobs, as firms cut existing staff and scale back new hires. But companies will also attempt to achieve greater efficiency, tackling a "productivity crisis" in the UK that has only recently begun to improve.

The economic consequences are fiercely contested – but most agree on the underlying principles. The latest confirmation came from a Recruitment and Employment Confederation survey, which found that the number of people hired via placement companies in September grew at the slowest pace since early 2013, Reuters reports.

REC chief executive Kevin Green said the introduction of the higher minimum wage was causing companies in some sectors to think about investing in automation, which "might have a positive impact on UK productivity, but it could also put the brakes on employment growth".

Osborne has cited an Office for Budget Responsibility forecast that only 60,000 jobs will be lost. If that holds and companies become more productive, he will hope in years to come to be able to show the economy benefitted, even at the cost of short-term hires.

His case has been buoyed by a number of retailers offering a better-than-minimum wage deal. Lidl and Morrisons have said they believe there will be benefits to their business in terms of improved staff performance and retention from offering a higher rate than required from next April, and to staff of all ages.

The test will be whether the relatively benign estimates on jobs hold true. Speaking to the FT this week, the head of the Low Pay Commission, David Norgrove, said the OBR estimates were highly uncertain and that there could be more jobs lost in small businesses than currently anticipated.

Norgrove added that councils would need to pay more for care providers, which will create "problems" unless central government funding is increased – and hinted that the Government should be prepared to scale back on plans to boost the rate to £9 per hour by 2020 if the economy suffers.

Minimum wage: adviser calls for living wage 'review'

02 October

The leading business adviser to the UK government has said a reform that will phase in a higher minimum wage for most workers should be reviewed after two years.

Sir Ian Cheshire, the former B&Q chief who earlier this year took up a role as a 'non-executive director' at Whitehall, told the BBC's Kamal Ahmed he supported the reform and that it would focus businesses on productivity. But he said it was important to assess the impact of the changes over time, especially as the rate accelerates towards 2020.

The so-called 'national living wage' applies to those over the age of 25 and begins at £7.20 per hour from next April. It will then increase to a target of 60 per cent of median earnings by 2020, at which point it should be more than £9 per hour.

"We actually have been calling for a real increase in the minimum wage anyway, so in that sense the direction of travel is fine," he said. The problem is always when you get given a very short period in which to make a lot of change and that's where I think we should come back in two years... and then work out whether that trajectory still makes sense."

Businesses have been split on the new wage. Some analysts have bemoaned the likely effects on the hospitality and leisure, retail and care sectors, where Cheshire said staff costs could rise by up to 60 per cent. But a number of retailers have expressed support for the move, with some, including Lidl, Morrisons and Sainsbury's, even pledging to better the terms set out by the government.

Elsewhere the policy has faced renewed criticism from the Scottish government for not going far enough and "misappropriating" the term 'living wage', which was originally coined by campaigners advocating for a wage that reflects living costs.

The 'independent living wage' is currently set at £7.35 across the UK and £9.35 in London. The Scottish National Party advocates a voluntary rate of £7.85 north of the border, which the BBC reports around 300 companies have signed up to provide.

Roseanna Cunningham, the Scottish government's fair work secretary, said: "The so-called national living wage announced in the UK government budget is not a living wage and should not be referred to as such... It is simply an enhancement of the national minimum wage which disgracefully discriminates against the under 25s."

Minimum wage: Mitie says it's a fan of the living wage

30 September

George Osborne's policy of substantially bolstering the minimum wage for most workers is winning the support of an increasing number of UK businesses.

Mitie, the outsourcing firm, declared in a pre-results trading update this morning that it is "positive about the changes" and that the reform will help its workers' "feel better rewarded and more motivated to do the jobs they do". In short, says FastFT, the so-called national living wage will boost "retention rates" and productivity.

This has long been the counter argument to criticism that the policy will be unaffordable for business.

In fact, some employers are so convinced of the benefits that a wage war has broken out which has recently seen coffee brand Starbucks, discount supermarket Lidl and furniture giant Ikea pledge to go further than the minimum of paying £7.20 per hour to over-25s from next April (see below).

Under the Chancellor's plans, this will increase to 60 per cent of median earnings by 2020, when it should be above £9.

'Big four' supermarket Morrisons is the latest to make a bet on higher wages, after announcing that it would match the £8.20 per hour pay deal offered by rival Lidl, rising to £8.95 for staff in London. The Guardian notes that this will be partially offset by an end to paid breaks and extra pay on Sundays, but that it still amounts to a 13 per cent comparable rise. It also applies to all staff and not just those over the age of 25.

Across the wider supermarket sector, Sainsbury's has also recently pledged to beat the minimum with a £7.39 rate for all staff, including paid breaks. All of the major brands in the sector pay at least the minimum coming in from next year except Asda and Waitrose. John Lewis, which owns Waitrose, has said it is working on a restructure to its remuneration (see below), which currently includes an hourly rate of less than £7 and a lucrative profit distribution that is typically worth 20 per cent of total pay.

Mitie said that it would need to increase outsourcing prices, but that it would not be required to shed staff, adding that its customers were "supportive" of its approach. A similar sentiment was expressed by clothing retailer Next, which said prices would need to rise modestly but that wider wage inflation would make this "affordable" (see below).

Earlier this year, Mitie's care arm ran into trouble over allegations it was not paying the minimum wage to staff. In particular, the BBC claimed it did not pay staff for driving between visits and had encouraged carers to cut short visits in order to maximise efficiency.

There have been warnings over the effects of the new wage rate on the care sector, where margins are squeezed by the amount councils are willing or able to pay. Industry figures have called for the upcoming spending review to set aside more than £1bn additional funding in order to solve the funding crisis.

Minimum wage: Starbucks to better living wage terms

25 September

Hot on the heels of Lidl, another major brand facing an increased wage bill when the national living wage comes in has pledged to better the minimum terms set out by the chancellor.

As competition sparked by the new rate heats up, Starbucks has said it will offer all its staff £7.20 per hour from next April, Sky News reports. This means the coffee giant is going further than required as the new minimum applies only to those aged 25 and above. The decision also "silences critics who argued that companies who employ large numbers of low paid workers will merely employ more under-25s to avoid paying the higher rate", Sky says.

The national living wage will eventually rise to a target of 60 per cent of median earnings by 2020, at which point it could be as high as £9.35. It should not be confused with the "independent living wage", which is a voluntary rate advocated by campaigners and currently £9.35 in London and £7.35 elsewhere.

The discount supermarket chain Lidl appeared to spark a wage war last week when it pledged to pay all its workers at least the independent living wage, with most workers' hourly rates rising to £8.20. Like Lidl, but unlike its coffee rival Costa, Starbucks has confirmed it will not need to raise prices to cope with the pay rises. The clothing retailer Next has said it may need to modestly raise prices, but that this would be "affordable" given the wider wage inflation.

Andy Street, managing director of mutual John Lewis, was more positive about the changes. He told The Guardian it would force the chain to "restructure staff benefits".

At the moment the company pays many staff less than the new minimum wage – for example, the hourly rate at its Waitrose supermarkets is below rivals at less than £7 – but it pays a share of profits as a bonus that can be worth as much as 15 per cent of total staff remuneration. This makes its employees among the highest paid in the sector.

"One of the things I am a little concerned about is that it moves to concentrating on base pay when actually the total reward, and all the richness of that benefit, has distinguished us over time," said Street.