Tesco pay tribunal: The legalities of unsocial hours

There is no legal definition of what hours count as ‘unsocial’ so what constitutes best practice here?

Tesco is facing a tribunal claim from employees after reducing ‘antisocial hours’ payments. The claim is with Acas for early conciliation but Tesco is not the only employer under fire for cutting pay; Marks & Spencer and B&Q have both been in the headlines for similar issues recently.

Many businesses, especially in the retail and services sector, no longer operate traditional working hours. Many large companies are taking advantage of people's desire for immediate access to goods by staying open for 24 hours and increasing trading hours at the weekend. Finding staff to work unsociable shifts can be difficult so an obvious incentive is to offer enhanced pay.

There is no legal definition of what counts as ‘unsocial’ so it is for an employer to choose which hours they class as unsocial and which will receive enhanced pay. Usually the hours where people can enjoy a social life – for example: night time, weekends and bank holidays – are classed as unsocial. There is also no legal requirement for employers to pay a certain rate during these hours. The Minimum Wage and National Living Wage rates apply a minimum hourly rate to all hours, regardless of when these fall.

Employers that offer enhanced rates of pay can do so by different methods; some may choose to pay an ‘add on’ to the normal hourly rate, while others may give a single payment (for example a weekly allowance) to compensate for unsocial hours. Enhanced rates should, however, be offered to all members of staff to avoid discrimination.

In February a deal between Tesco and the union USDAW revealed that most staff would receive a 3% pay rise, but pay for working Sundays, bank holidays, late nights and overtime would be cut to time-and-a-half. Only long-serving staff (those employed before July 1999) received double time payments for these shifts. The firm representing the employees in this claim estimates that more than 37,500 workers are affected by these pay cuts, with the majority aged over 40. The claim is that the cuts discriminate against certain groups, especially older workers.

This case highlights the importance of getting pay changes correct to limit the risk of facing an employment tribunal. Changes to pay and enhanced rates are, essentially, a change to the terms and conditions of employment. So employers who want to make these cuts should carry out a consultation process to seek agreement to the change.

Informal consultation is, unfortunately, not likely to result in an agreement because the change will negatively affect employees. A formal consultation process, depending on the number of workers affected, will possibly be needed. This process requires employers to create a business case detailing why the change is needed, and to consult with staff, or representatives, on the change. A last resort for employers if agreement is not reached is to dismiss the employees and re-engage them on the changed terms, though this carries the risk of an unfair dismissal claim.

Kate Palmer head of advisory at Peninsula