MPs have called on government to take action to stop companies from acting against the spirit of laws intended to improve workers' welfare, such as by paying for wage increases by trimming other benefits.
Siobhain McDonagh MP, who has campaigned against what she says are examples of companies trimming back staff benefits to offset other costs, led the debate in the House of Commons on Thursday.
In April, then chancellor George Osborne announced that the minimum wage for those over 25 would rise from £6.70 to £7.20 per hour from 1 April and rebranded it the "national living wage".
Following the increase, BuzzFeed News revealed that companies including B&Q, Eat, and Caffé Nero had allegedly trimmed costs in other areas to make up for the rise.
McDonagh called on the government to "close down the loopholes" and end the "governmental inaction that led to [the] entrenchment" of the practice.
A growing number of high-profile companies have used [the national living wage's] introduction to cut total pay for longstanding employees," she said, "despite the former chancellor’s promise that ‘Britain is getting a pay rise'." She urged politicians to "call out" companies, large and small, that were "unscrupulous".
In April, Caffé Nero sent a letter to staff scrapping free lunches, the chain Eat stopped paying its staff during lunch breaks, and B&Q was accused by staff of cutting pay on Sundays and bank holidays to offset the cost of the national living wage.
McDonagh also criticised Marks & Spencer, which cut the rate of pay for thousands of its long-serving staff, who currently earn double pay for Sunday and bank holiday shifts or a premium for working through the night. It restructured the pay while also raising the basic pay of the majority of its workers.
The company, which maintained it had planned the restructure for 18 months, has defended the move. But McDonagh, who said staff would face losing their jobs unless they signed the new contracts, urged MPs to "bear all of this in mind when they are doing their Christmas shopping at M&S next month."
"In many ways, B&Q and M&S have just been unlucky in being singled out, because there are many others doing the same sort of thing," she said.
"What each of these case studies demonstrate is that we desperately need to tackle in-work poverty, and the unscrupulous pay practices and governmental inaction that lead to its entrenchment."
Other MPs including Liz Kendall, Labour MP for Leicester West, criticised companies including Ginsters manufacturer Samworth Brothers for changing the terms and pay of workers while "bosses are not taking a pay cut themselves".
They also criticised the concept of "bogus self-employment in the gig economy" – a reference to companies including Deliveroo, Uber, and Hermes that insist workers are self-employed and are therefore, under the law, entitled to fewer benefits.
Pressure has been building on companies' pay and benefits structures. Last week a group of Uber drivers won the right to be paid the minimum wage, and earlier this month MPs announced an inquiry into modern working structures.
Announcing the report, the chair of the business select committee, Iain Wright MP, said: “In recent months we’ve seen growing evidence of agency workers and those working in the ‘gig economy’ being exposed to poor working conditions.
"This growing trend raises questions over employment status and lack of worker rights.”
The inquiry would, he said, "explore how government could help to "foster a vibrant, dynamic, innovative economy with laws that deliver the benefits of flexibility but which prevent exploitation".
McDonagh urged government to take action against companies that "mistreat their self-employed workers to keep their costs to a minimum".
"They can dress it up whichever way they like," she said, "but that is what's happening – we as politicians need to call it out and take them on."