Saturday, 9 April 2016

Free Lunch

Well, not much of a surprise...

Caffe Nero will no longer provide its staff with a free lunch while on shift following the introduction of the new National Living Wage. 

Employees at the coffee chain were told in a letter that the perk would end on 11 April following the introduction of the new minimum wage for over 25s of £7.20 per hour.

The company said the change in wages, which came into force on 1 April, will have a “significant financial impact of the business”  and they are therefore looking into new ways to cut down on costs. 

The thing with employee perks is that they're mutually beneficial. You can give people a sandwich which costs you x pence, but which the employee values at a higher value (which can be called y). And you give them that instead of z pence, which is somewhere between x and y. There's also some hard to calculate but useful things, like you can get product feedback from staff, and in the case of cafes, they stay on the premises.

Or, let's put in some made up numbers...

Let's imagine the current remuneration is:-
Wage: £6.50
Lunch Cost: 70p

But the employee sees it as:-
Wage: £6.50
Lunch Value: £1

If the government forces Nero to raise the wage to £7.20, and they want to keep their costs down to avoid raising prices, their only option is to replace the "lunch" with wage. You've removed their flexibility to replace a cash benefit with something else.


Shiney said...

And the government gets to to tax the cash benefit but not the 'free' lunch (unless its included in p11D BIK calcs - not sure on that if all employees get it).

And I bet somebody in the treasury has already thought about that and calculated the extra tax revenue the government would get.

Bayard said...

I suspect there is an element of shroud waving in this, too.

Curtis said...

Maybe I'm missing something but I always thought the people who work in places like Caffe Nero just take whatever they want, whenever they want...

JuliaM said...

Yay! Consequences!

Bayard said...

Curtis, quite possibly the "free lunch" was simply a way of regularising the tendency of staff to help themselves. In which case, either this really is just shroud-waving, or Caffe Nero are going to have to spend a lot of effort trying to stop staff taking the free lunch anyway, which will probably cost them more than the free lunch.

The Stigler said...

I doubt it. If they did, it would have been PR managed... announced with some pretty, middle-class late 20s girl being available for the press to talk to.

Uh, no, because these things like sandwiches are brought in from outside. It's a product with a barcode. It's no different to someone in Tesco helping themselves to bags of Haribo. I'll bet Subway allow staff to make food because it's basically untraceable (and on top of that, they're only taking the cost of raw food).

Bayard said...

"It's no different to someone in Tesco helping themselves to bags of Haribo."

I always thought they did.