‘An own goal’ | BrewDog axing real living wage is a 'disastrous employee relations misstep', expert warns

BrewDog axing real living wage is a 'disastrous employee relations misstep', expert warns

BrewDog has made a “disastrous employee relations misstep” by scrapping its real living wage offering, an employment law director has told HR Grapevine.

The brewing giant revealed this week that it would no longer pay its employees the real living wage despite having done so since 2015. Instead, new hires will be offered the national minimum wage of £11.44 an hour, which is below the £12 cost of living-based rate.

Bosses at BrewDog, which is the UK’s largest craft beer brewer, said the move was necessary after recording a £24 million operating loss last year.

The firm told employees: "Even with this strong performance over Christmas, as a wider business there is no hiding from the fact that in 2023 we made a trading loss, and despite many efforts in the past 12 months to reduce our spending we still need to find more ways to get this business back to profitability and the financial stability that is needed.

“Inevitably, this does mean making some hard decisions.”

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The real living wage is a voluntary measure, and is calculated based on living standards. It is separate from the national living wage imposed by the Government. From April 1, the rate will increase to £12 an hour across the UK, and to £13.15 for workers in London.

In contrast, pay for BrewDog staff based in London will be frozen at £11.95, more than £1 less per hour that the upcoming rise to real living wage in the capital.

Withdrawal of real living wage ‘outrageous’ - union states

Naturally, the announcement was met with immediate backlash. Bryan Simpson, hospitality organiser of the union Unite, said: "To withdraw the real living wage now, during the most acute cost of living crisis in a generation is outrageous.

"We are already working with our Brewdog members across the country to collectively challenge this awful decision and force the senior management of the company to do the right thing by the workers who have made them millions."

Brewer has abandoned another core belief - campaigners claim

Punks with Purpose, a campaign group set up in 2021 by ex-BrewDog workers alleging toxic behaviours among senior leaders, issued a statement saying: "The real Living Wage has been a cornerstone of BrewDog's public identity for years.

"This real-terms pay cut for hard-working front line staff proves there is no principle too dearly held for them to abandon and is directly opposed to BrewDog's previous claim that their 'crew are their most important resource' and giving them fair pay for the work they do is one of their 'core beliefs'."

BrewDog responds

A spokesperson for the company said: "As a result of the changes we're making - and despite unprecedented challenges in the hospitality sector - our staff outside London will be getting a 4.95% increase in base pay, and crew currently working in London will be paid 4.5% above the National Living Wage.

"We have always been fully committed to doing the best we can for our people, and our benefits package is far more generous than the industry average."

BrewDog scores HR own goal - legal expert says

However, Gerard O’Hare, Legal Director for Scotland at employment law and HR consultancy firm WorkNest, told HR Grapevine that, although the move may make financial sense, the company risks making a ‘tactical HR error’ which could make prospective employees reconsider the idea of working for BrewDog, and change current workers’ views on the business.

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“The announcement that self-styled punk brewer Brewdog has dropped out of the accredited real Living Wage scheme has been met with anger by employees, and widespread disdain from the hospitality industry,” O’Hare said.

“While an employer is not legally bound to offer employees the real Living Wage – an amount higher than the National Minimum Wage which employers are required by law to pay – Brewdog’s announcement is a disastrous employee relations misstep, particularly given employees remain knee deep in the cost-of-living crisis.”

O’Hare added: “Brewdog prides itself as being the employer of choice and there was much fanfare when they made it into the Sunday Times Best Places to Work, however this HR own goal has certainly served to relegate the Company in the eyes of its employees and will likely make prospective employees think twice about working for them. From an accounting perspective, the move may make financial sense, but Brewdog may find that they have made a tactical HR error from which it will be very difficult to recover.”

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