‘Unjustified’ HMRC Loophole Permitted Tesco To Pay Under Minimum Wage, Says Employee
Omar Malik
18/03/24
(Image Credit: jax10289/Shutterstock)
Tesco's month-long pay rise delay has left many employees earning lower than the minimum wage, sparking outrage among workers.
HMRC rules say minimum pay rates can legally be implemented from the beginning of the ‘pay reference period’ starting from 1 April - which commences on 28 April for Tesco.
Siobhan, a customer assistant at Tesco for over five years, condemns the move: “I think it’s completely unjustified to be honest. I can see that it’s a little workaround - a loophole that HMRC are allowing because Tesco’s ‘pay period’ begins before the new financial year.”
(Image Credit: The Guardian/Sarah Butler)
Tesco workers are paid four-weekly, rather than monthly, which Siobhan says prompted the delay: “Our pay dates won’t match up with the standard. It’s not ‘payday Friday’ for us. As we’re four-weekly, this three-day pay period that happens before minimum wage goes up is allowing them to pay under it for twenty-seven days, which is just ridiculous.”
The supermarket announced plans earlier this month to pay workers £12.02 an hour - up 9.1% from the current hourly rate of £11.02. Yet this rise will not take effect until 28 April - nearly a month after the minimum wage increase of £11.44 an hour is implemented on 1 April.
The pay rise delay has saved Tesco over £17 million while lowering earnings for employees, frustrating long-term workers such as Siobhan: “Even the benefits that come with being a long-term colleague are cut in this new deal. When I started working, I was always contracted on a Sunday - but you could opt out of Sunday working. Now they’ve got rid of that completely.”
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Tesco is the UK’s largest private-sector employer, but many workers like Siobhan feel discouraged: “I will earn less with this increase than I did before as I only work two days a week. All my study premiums are being cut, so anything attracting me to stay at Tesco versus other supermarkets is just gone. It’s not in line with others, and it’s certainly not trailblazing.”
Yet trade union USDAW says the pay rise largely benefits workers, accounting for “the largest investment in pay in a single year, with the highest entry rate for store employees of any major supermarket.”
Asda and Aldi announced earlier this month that they will raise minimum pay to £12.04 an hour; while Sainsbury’s and Lidl each increased pay to £12 an hour.
Blether Magazine has reached out to Tesco for comment.