From fish factories in Grimsby to coffee shops in central London and even Waitrose supermarkets, workers across the country are seeing perks and pay rates cut as companies try to offset the cost of George Osborne’s national living wage.

On Monday, just over two weeks after the new minimum pay rate of £7.20 an hour for over-25s came into force, MPs will debate the effect the 50p rise in basic pay has had on thousands of workers.



In the past few weeks the Observer has learned of companies withdrawing overtime and Sunday pay, bonuses, free food and paid breaks in order to keep the wage bill down.

Siobhain McDonagh MP, who called the backbenchers’ debate, said: “When the chancellor announced the national living wage, he said: ‘Britain deserves a pay rise and it’s getting one.’ I took him at his word on that. People should get a pay rise, not a pay cut.”

She began campaigning after a constituent who works for B&Q reported that a rise in basic pay was being accompanied by cuts to Sunday and bank holiday pay as well as bonuses. It emerged that her constituent would be more than £2,000 a year worse off.



She has since met other B&Q workers who are set to lose out, including one whose take-home wages will drop by 30% with the loss of Sunday pay. They had worked at the retailer for almost 20 years.

McDonagh argues that the government should look at preventing businesses offsetting the cost of the national living wage by cutting perks. That could include insisting that staff are paid for the legally required 20-minute break in a six-hour shift.

Along with the national living wage, the chancellor also announced a cut in corporation tax to help companies afford it. Corporation tax will fall from 28% in 2010 to 17% in 2020, giving businesses a £15bn tax break.



McDonagh said: “If business is getting £15bn, the people who help them make their profits deserve a bit of that.”

Gareth Jones, deputy regional secretary of the Unite union in Wales, is backing workers at Toyoda Gosei, a car parts manufacturer with plants in Swansea and Rotherham, which has put an end to paid breaks.



He said: “Employers are not entering into the spirit of the national living wage. Unite regional officer Dave Monaghan agreed: “We believe these cuts breach the whole point of the national living wage – to give low-paid workers a step-up.”

After an online petition signed by more than 136,000 people, B&Q has offered two years of compensation and promised to continue consultations. But many other workers are facing similar cuts with much less publicity.

SUNDAY AND OVERTIME PAY

Waitrose, which as part of the John Lewis Partnership is constitutionally impelled to take care of its staff, who own the business, has stopped paying Sunday and overtime rates for new shopworkers.



Until changes introduced in February, some workers received double pay on Sundays. Waitrose insists the changes are not linked to the national living wage and have been planned since last year. There have also been cuts to Sunday pay at Morrisons and B&Q, and Tesco reduced Sunday rates from double time to time and a half. Wilko is also cutting Sunday and overtime pay.

At Seachill, a fish processing plant in Grimsby, the Unite union says workers, who come to the end of a 45-day consultation period next week, potentially face dismissal if they do not agree new contracts.



The new deal increases basic pay to £7.35 an hour, higher than the national living wage, but cuts overtime from double time to time and a quarter. Unite says most workers will lose out, because they regularly do more than 10 hours of overtime a week. But Seachill said the vast majority of our employees would see their pay improve overall.

Dunelm, the homewares retailer, has also scrapped Sunday and bank holiday pay, after increasing basic wages to £7.50 an hour (£8.20 in London). One worker told the Observer that staff now get only one half-hour paid break if their shift is longer than six hours. “Shifts that last eight hours or longer can be physically demanding and being restricted to one break isn’t a comfortable way to work,” the staff member told us.

PAID BREAKS

At Toyoda Gosei, basic pay has risen to between £7.20 and £7.97 an hour, but the company has stopped paying staff for the 30-minute break they get in an eight-hour shift. The company said it had given “careful consideration to how we implemented the new living wage for our employees against a backdrop of ongoing financial uncertainty”. Supermarket chain Morrisons also axed paid breaks when it upped its hourly pay. Many other retailers, including Tesco, Aldi and Lidl, do not pay for breaks.

HOURS

Cleaners working for support services company Carillion are facing cuts to hours. The GMB union said cleaners servicing Nationwide building society’s Swindon headquarters would see a £40 cut in weekly pay in a “cynical move” after Nationwide signed up to the independently verified living wage of £8.25 an hour. Carillion says staff are still being consulted but that some cleaners could see hours increased.

FOOD PERKS

Last week, coffee chain Caffè Nero admitted it had stopped giving staff free food, offering a discount instead. But workers of all ages will earn at least the national living wage. Food perks have also faced the chop at John Lewis and Asda, both of which have closed a number of staff canteens.