Save Money, Work Harder, the Smart Price Guarantee: Asda pressures staff to sign new contracts reducing flexible working

November 25, 2019

2 min read

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What's going on here?

In a bid to make them more competitive, Asda have attempted to vary the contracts of all of their employees, which has caused major upset.

What does this mean?

Asda’s new employee contracts have been agreed by almost all of the 100,000 employees, under 1,000 remain. However, the terms of the new contracts seem to reduce the very things that the employees cherish about working there.

The sticking points for the remaining workers are the inflexible terms which include: 

  • the ability to move people to different departments,
  • variation of working hours,
  • the loss of paid breaks,
  • compulsory bank holiday shifts, and
  • attending work at shorter notice.

These changes do come with some increased benefits however, which includes an increase in hourly pay rates, which now stand at £9.18 (£10.31 in London). That said, for most the reduction in flexible working outweighs the increase in salary.

What's the big picture effect?

Asda, which is owned by US retailer Walmart, is a legacy retailer (a long-standing, well-known company). With the onset of technological disruption, legacy retailers have had to evolve in order to compete in ever-more crowded markets. Asda’s new contract represents a move by the company to recalibrate their employees’ wages in line with the rest of the market.

While the changes make sense from a business perspective, the general shift we have seen in recent years has been towards more flexible working in order to improve quality of life and mental health of workers. If Asda’s employees approve the new conditions, then this could pave the way for other supermarkets to follow suit and this will row back on the progress that has been made.

Should the disgruntled employees succeed in defeating the new contracts, Asda will be forced to look to other areas of their business to cut costs. One approach could be to reduce their supply costs, which is what motivated Asda to try and merge with Sainsbury’s (a deal that the Competition and Markets Authority blocked in early 2019). Alternatively, Asda may begin retailing more “budget” products which would bring down costs and increase profit margins. This approach has proven successful in recent years for discount supermarkets such as Aldi and Lidl. 

The deadline for signing the contract has now passed and Asda has issued further letters offering asking the employees to sign up. We await the result of this to see if employees have been able to hold on to their jobs under their existing contracts.

Report written by Mohammad Hammoud

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