Chancellor slams businesses for cutting staff benefits in response to National Living Wage

21 April 2016 -

George Osborne’s comments come after a number of companies cut perks such as free lunches and paid breaks following the 50p increase in the hourly wage for over 25s

Chancellor George Osborne has urged companies not to cut staff benefits as a result of the introduction of the new National Living Wage.

The Chancellor’s rallying cry comes after of number of companies have announced cuts to staff perks, with many blaming the moves on the increased costs of funding the National Living Wage.

Coffee shop Caffè Nero has stopped providing free lunches for its staff in response to the ‘significant financial impact on the business’ of offering the increased hourly wage of £7.20 for over 25s.

Workers at the coffee shop will instead be offered a 65% discount on all of Caffè Nero’s food range.

The company told the BBC: "The introduction of a new National Living Wage is a huge potential cost to the business, but also a great opportunity to review pay, and reward employees for their investment in Caffè Nero. From 11 April, all current employees, regardless of their age, will be moved to at least the new National Living Wage if currently below it.

"Alongside this investment, all current employees will continue to receive paid breaks and a substantial discount on food and drink bought when on shift. Employees currently paid over the National Living Wage have all had a full pay review, and the big majority will be receiving a pay increase depending on their role or situation.

"Much of this is above and beyond the minimal wage requirements."

Meanwhile, a spokesperson for Eat told Buzzfeed that it had stopped paying staff while on a break, but said that the increase in salary made up for the change.

“95% of our employees enjoy a pay rate in excess of the £7.20 living wage,” they said. “The average hourly rate in Eat is now £7.60 per hour, some margin above the living wage rate set by the government.

“All of our employees also get a free lunch every day that they work, as much free tea and coffee as they want, and the opportunity to earn more through bonuses and incentives.”

Speaking on ITV’s The Agenda, Osborne urged companies to respect the ‘spirit of the law’ and consider the impact cutting staff benefits may have on their reputations.

“We will enforce the letter of the law but we want companies to also live by the spirit of the law,” he said. “But of course what you get is some companies cutting the lunch break, or cutting the free lunch they were providing. That may not be the letter of the law and we don’t in this country prescribe what everyone eats for lunch, but it’s not the spirit of the law.

“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.”

Osborne’s comments comes after a debate in the House of Commons on the impact of the 50p increase in the National Living Wage on Monday when Conservative Minister Nick Boles said companies would be put under force to meet their ‘moral obligations’ to their employees.

“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 said.