Coffee chain sparks fresh concern over business practices amid fears low-paid staff will bear cost of potentially increased tax bill
Starbucks is cutting paid lunch breaks, sick leave and maternity benefits for thousands of British workers, sparking fresh anger over its business practices.
On the day the House of Commons’ public accounts committee branded the US coffee chain’s tax avoidance practices “immoral”, baristas arriving for work were told to sign revised employment terms, which include the removal of paid 30-minute lunch breaks and paid sick leave for the first day of illness. Some will also see pay increases frozen.
The changes affecting about 7,000 coffee shop staff emerged as the company tried to quell public and political outrage at its use of secretive company structures that has seen it pay just £8.6m in UK tax over the past 13 years on sales of £3.1bn.
On Saturday Starbucks announced it would open talks with the UK government that could lead to it paying more tax in future and on Monday it was reported that such an announcement could come on Wednesday. But at the same time it was telling workers it was removing benefits and changing employment arrangements.
The new contractual terms being circulated to staff across 750 stores include the removal of cash incentives for becoming manager or partner of the year in favour of the award of a plaque and the removal of a bonus scheme for women returning after they have had a baby because “it is not considered a valued benefit”.
A worker who claimed he was told to sign the new contract last week or leave, told the Guardian colleagues were “really upset” at the changes and said it appeared relatively low-paid staff were being forced to help bear the cost of the company’s potentially increased tax bill.
“It’s really convenient for them to say we’re going to pay more taxes, when they’re going to save money with us, the staff,” said the coffee shop worker on condition of anonymity. “It’s convenient saying we’ll pay more because they’re going to save more – and the perfect excuse for them is to say to staff ‘We’re going to pay more taxes, so…’.”
He said his manager explained Starbucks “is losing a lot of money in Europe, so they said they needed to make these changes to save the company money”.
Even apparently minor benefits are being cut. Starbucks is ending the practice of giving hampers to new mothers in favour of “a card and Starbucks baby grow and bib”. The new policy on staff birthdays orders: “Removal of birthday cards. Bakery good code to be issued in store for free birthday treat.” Congratulations cards on the anniversary of the first four years of service are being withdrawn.
A Starbucks spokeswoman defended the contract changes saying they followed several months of consultation with a group of employees and that “all partners (employees) were given the opportunity to feed back”.
“That happened throughout the summer,” she said. “It is entirely unrelated to the story that we are in discussions with HM Revenue and Customs and the Treasury.”
MPs said on Monday they found it hard to believe Starbucks’s claim it had made a loss for 14 of the 15 years it has been operating in the UK, given it had a 31% market share by turnover and had briefed shareholders the UK business was making 15% profits.
Starbucks managers have reportedly told staff they must not discuss the new terms, and staff are afraid they could be dismissed if they do so, according to Martin Smith, national organiser of the GMB union, which represents some Starbucks workers.
“The reaction is one of confusion and fear,” said Smith. “On the removal of sick pay, do we really want our coffee to be made by someone struggling to work with a cold, because that is what will happen. It is not a good look for a top flight coffee maker.”
Starbucks said that was not its intention and the issue had been discussed with employees. It said in a statememt: “Employee pay and benefits are one of the largest investments we make in our business, and the decisions we have taken over the past few months have been about finding the right way to structure packages so that they are balanced across pay, benefits and development.”
Starbucks has told staff the changes followed a review of other businesses “to consider the competition and the norms in benefits packages”.
The company is introducing a contributory pension scheme that will allow baristas to contribute 1% of their salary, which will be matched by the company. It is also removing a three-month vesting period for life insurance cover. Other benefits are unchanged. Staff who complete five years of service will continue to receive a pen and the right to take four weeks off without pay.
In the revised terms and conditions, Starbucks tells staff that funding sick pay from the first day of illness “leads to a considerable cost for the company”. “It is not just the financial cost of paying partners for their sickness absences we have considered but also the impact this has on partners left to run the shift,” it said.
On paid 30-minute lunch breaks, it said: “We considered that many businesses don’t pay for lunch breaks. It is meant to be a break from work to have lunch and we therefore believe the long break should not be paid. We have decided to keep the 10-minute break paid as this is for a short-relief break for shifts of four hours or more”.