Earlier in the year, Tesco announced, as part of pay negotiations, a 3.1 per cent increase in wages for staff. This measure, however, was accompanied by a cut to the rates paid to some long-serving staff members for working unsocial hours, which has meant that affected staff have seen their pay packets decrease by 25 per cent. Tesco has stated that such adversely affected employees have been given an agreed lump sum transition payment equivalent to loss of earnings over 18 months.
Despite this transition payment 17 of the affected employees, all of whom have been employed by Tesco for at least 16 years, have made the decision to take legal action against Tesco on grounds that include age discrimination. They are currently going through the ACAS pre-claim conciliation process and so as yet no hearing date has been set.
Tesco's reason for making the changes to wages is to try to simplify premium payments to ensure fairness and consistency in its dealings with all staff members. Tesco is not the first employer to do this, Marks & Spencer being another notable example. It seems that, with the implementation of the National Living Wage and in difficult economic times, employers, especially retail employers, are unsurprisingly trying to find ways to reduce overall staff costs. In addition, society's move towards a 24/7 culture means that the perception of what "unsociable hours" actually are is changing and where historically it has been hard to find people to cover "unsociable hours" (hence the higher pay offered) now there is an increasingly flexible workforce willing to take on such hours.
For obvious reasons, reductions to employees' pay are often the hardest contractual changes to agree with employees. Employers wishing to alter pay arrangements should ensure that a fair procedure is followed, including ensuring proper consultation and a review of the impact of any proposed changes on particular groups of employees. Where possible, like Tesco, offering to "buy out" a certain aspect of pay is advisable. Forcing through changes to pay arrangements without employees' consent or a contractual right to do so is not recommended.
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