Since the introduction of the National Living Wage, large companies have been under fire for taking steps to reduce the pay bill as these have mostly including reducing employee benefits, such as removing entitlements to free lunches. More employers are now under fire for cutting pay, including Tesco who are facing tribunal action from employees after reducing ‘anti-social hours’ payments.

Tesco had previously announced a deal, brokered with the union USDAW, that would give most staff a 3% pay rise but would see pay for working Sundays, bank holidays, late nights and overtime reduced from double time to time-and-a-half. The staff who still received double time for these hours were mainly long serving staff who had been employed before July 1999 so the majority of the affected 37,500 hourly paid workers were aged over 40. They faced a pay reduction of 25% and brought a claim that the pay cut discriminated against particular groups of staff, especially older workers.

It is now more common for businesses, especially in retail, to operate outside traditional working hours of 9am – 5pm. The rise of immediate consumerism means that businesses are moving towards longer hours, same day delivery and even staying open for 24 hours. What this means is these businesses have to have a full rota of staff during these extra hours. Recruitment and retention of staff for these hours is often difficult and the obvious way to ease the problem is to pay additional rates for working these hours.

There is no legal definition of what ‘unsocial hours’ are. Employers can pick and choose which hours they class as unsocial though the obvious choices are night hours, weekends and bank holidays. There is also no requirement to pay a certain rate or an extra rate for these hours. So long as all hours, taken together, are paid the current National Minimum Wage or National Living Wage this is sufficient. Employers who choose to pay enhanced rates for unsocial hours can do so by a variety of methods including paying an ‘add on; on top of the normal hourly rate or paying a single payment to compensate for the inconvenience of working these hours. It is important that any enhanced rates are offered to all staff working these hours so there can be no claim of unfair treatment.

If employers are looking at reducing unsocial hours payments, the Tesco claim shows how important it is to get right. Changes to enhanced rates are, essentially, a change to the employee’s terms and conditions so a consultation process should be followed to seek agreement to the change. Informal consultation is unlikely to achieve agreement to a decrease in pay so a formal consultation process, depending on the numbers affected, will be necessary.