Business Fail To Pay Properly

 

DIY store B&Q and the fast food chain Five Guys are among hundreds of UK businesses named by the government for paying staff below the minimum wage. More than 600 employers were ordered to pay affected workers the outstanding wages, with £4m returned to workers, according to the Department for Business and Trade. The firms have also been issued penalties worth £7m. The list of 658 businesses includes shops, restaurants, nurseries, social care providers and a handful of NHS trusts. The period of underpayments covered by the list varies depending on the employer, but overall spans from 2013 to 2025. Minimum wage is £12.71 for staff aged 21 and over. For 18 to 20 year olds the rate is £10.85, and for under 18s and apprentices it is £8. B&Q underpaid 4,530 workers a total of more than £456,000, according to the government. The list marks the first "naming round" since the Fair Work Agency was set up in April under the Employment Rights Act. As well as enforcing the minimum wage, the agency also will soon tackle practices of denying workers holiday and sick pay.

BBQ - What is the impact for the businesses for this?

Minimum Wage

Slovakia Becomes Number One Car Manufacturer

This is the European factory of Korean car company Kia, just outside the city of Zilina in the north of Slovakia. It represents, Kia says, an investment of €2.5bn ($2.9bn; £2.2bn). Volkswagen also produces cars in Slovakia. So does Stellantis (formerly Peugeot-Citroen, Fiat and Chrysler), and Jaguar Land Rover. Volvo is opening an electric car factory here in 2027. Slovakia, which is home to 5.4 million people, makes almost a million cars a year. This is a small number compared to the world's largest producers, such as the biggest, China, which manufacturers a whopping 31 million cars per annum. Yet Slovakia is the number one producer on a per capita basis - relative to the size of its population.  Kia says the average salary at the facility is €2,400 per month. That is substantially higher than the country's average monthly salary across the entire economy, which official figures show but at the same time it is considerably lower than the EU-wide average of €3,417. Car industry expert Peter Prokop says that back then the labour costs in Slovakia were 20% of those in Germany. Kia Europe's outgoing chief executive, Marc Hedrich, says that Slovakia's car manufacturing industry also benefits from the country's central location. "Slovakia is really in the heart of Europe, quite well-connected to the big markets," he says. Another important Slovak advantage is its dense network of car industry suppliers. Some 360 companies work for the car industry. "The supplier base is enormous," says Mr Hendrich, "this is critical". Kia didn't want to go into details about the incentives it received from the Slovak government to start production in the country back in 2006. Yet Hedrich did say it received a tax credit of €29m for transforming its Slovak production lines for its new electric vehicles, the total cost of which was €108m. The Slovak government offers these incentives to carmakers because the benefits for the country are enormous.

BBQ - What is the biggest benefit for being a car manufacturer in Slovakia?

Slovakia Car

, external was €1,403 in 2023

CEO Pay Inequality

 

The chief executive of a FTSE 350 company is paid 52 times as much as a typical worker, according to the latest measure of inequality between bosses and their employees. Median pay for FTSE 350 chief executives was £2.5m last year, which works out at 52 times a median worker’s pay, according to a new report from the High Pay Centre campaign group. The widest gap was found at the cleaning, security and waste management group Mitie, whose chief executive, Phil Bentley, was paid £14.7m, 575 times more than a middle-earner in the 2023-24 financial year. Tesco ranked the second highest for the same period among FTSE 350 companies legally obliged to report the figure. With a package worth nearly £10m, the supermarket’s chief executive, Ken Murphy, was paid 431 times more than a typical Tesco worker that year. The most recent ratio, for the company’s 2024-25 financial year, was lower, at a multiple of 373 as Murphy’s pay fell to £9.2m. Luke Hildyard, the director of the High Pay Centre, said a maximum pay ratio between chief executives and workers could help ensure that all workers received “a fair reward for their contribution to business success”. The High Pay Centre suggested all companies should be required to publish their CEO-to-worker pay gaps in their annual reports, and include pay figures for outsourced workers in their calculations.

BBQ - Do you think this gap is too big? Should there be a limit?

CEO Pay

Tesco Wage Rise

Tesco will lift pay for its store staff by 5.2% but will scrap the extra pay for working on Sunday. The UK's biggest supermarket chain said the hourly rate will go up by 43p to £12.45 from 30 March after reaching a deal with unions. It will raise pay again to £12.64 from the end of August - a little above the UK national minimum wage which is set to rise to £12.21 per hour from April. However, Tesco will also drop the current 10% pay bonus for Sunday shifts for all staff, which it had already stopped providing for new starters. Tesco's UK chief executive says the £180m spent on funding the pay increases is a "significant investment". The move comes as many big supermarkets raise pay to attract more staff in a tight labour market. In January, Sainsbury's said it will raise hourly pay by 5%, also in two phases, but said it was cautious about recruiting new staff in 2025 due to rising costs "to help manage a particularly tough cost inflation environment". The German-owned discount chain Lidl will also raise pay, it announced in February, from £12.40 per hour to £12.75. Chancellor Rachel Reeves announced in the October Budget that in April, along with the national minimum wage, employer National Insurance contributions will also rise. Businesses have said the extra costs from these changes will mean higher prices, job cuts, and shop closures, though unions have criticised firms for saying this.

Tesco Wage Rise

Lidl Raises Pay Ahead of Minimum Wage

 

Lidl's recent announcement of a pay raise for its UK staff, pre-empting the national minimum wage increase, signals a significant move in the retail sector. As reported by the BBC, this £39 million investment translates to a 4% to 10% pay rise for 26,000 employees, exceeding the upcoming minimum wage. This proactive approach likely stems from a need to attract and retain talent in a competitive market, boost morale and productivity, and enhance the company's reputation. While the move is positive, it also raises questions about the ability of smaller businesses to follow suit, the potential for wider wage inflation, and the long-term sustainability of such practices. Ultimately, Lidl's decision sets a new benchmark for employee compensation and highlights the increasing pressure on businesses to address the cost of living crisis and value their workforce.

BBQ - Discuss the potential benefits and drawbacks for Lidl of implementing this pay rise, considering factors such as employee motivation, recruitment, and profitability.

Lidl Minimum Wage