Impact of National Minimum Wage Scandal on Tesco's Reputation and Performance

SUMMATIVE ASSESSMENT
(The impact of the national minimum wage
scandal on the reputation and
performance of TESCO PLC)

Table of Contents
INTRODUCTION...........................................................................................................................3
Overview of the topic..................................................................................................................3
Research Aim, Objectives and Questions...................................................................................3
Review of the problem faced......................................................................................................4
Background of the organisation..................................................................................................4
LITERATURE REVIEW................................................................................................................5
What is the concept of national minimum wages in UK's organisation?....................................5
What are the policies of worker's pays and salaries by Tesco?..................................................7
What is the problem faced by organisation in context of national minimum wages scandal?...8
RESEARCH METHODOLOGY...................................................................................................10
FINDINGS (DATA COLLECTION ANALYSIS).......................................................................13
Frequency Distribution Table...................................................................................................13
Data and graphical presentation................................................................................................15
CONCLUSION AND RECOMMENDATION.............................................................................25
Conclusion................................................................................................................................25
Recommendation......................................................................................................................25
REFERENCES..............................................................................................................................27
APPENDIX....................................................................................................................................29
Questionnaire............................................................................................................................29

INTRODUCTION
Overview of the topic
Corporate governance refers to a system by which companies are managed, controlled
and regulated. It involves laws, procedures, processes and rules so that every activity of the
company can be conducted in an ethical manner. This includes external as well as internal factors
that increase the interest of stakeholders such as suppliers, customers, government regulators,
management and many more towards the company (Walmsley and et. al., 2018). The present
investigation focuses over carrying out detailed information about national minimum wages in
the companies operating in the United Kingdom. It is an important part of corporate governance
of a company as it is necessary to pay minimum wages and pays to workers and labours so that
they can be retained in the company for longer time duration. Thus, this report shows how
national minimum wage scandal has impacted performance and reputation of the organisation.
Primary and secondary research methods are used in this report for collecting information about
the chosen topic. Hence, this report covers detailed information through these data collection
methods.
Research Aim, Objectives and Questions
Research aim
The aim of this study is to assess the national minimum wage scandal on the reputation
and performance of Tesco
Research objectives
 To explore the concept of national minimum wages in company
 To analyse the national minimum wage policy followed by Tesco Company
 To evaluate the national minimum wages scandal on the reputation and performance of
Tesco plc
Research questions
 What is the concept of national minimum wages in UK's organisation?
 What are the policies of worker's pays and salaries by Tesco?
 What is the problem faced by organisation in context of national minimum wages
scandal?

Review of the problem faced
The major problem identified in the current investigation is that organisation faces issue
in following national minimum wages and this negatively impacts the employees and labours
working in the organisation. It is identified that when labours and workers do not get appropriate
and relevant wages or pay for their work then they make decision of leaving the organisation and
ultimately creates negatively impact over the image of the company in the market (Schulten and
Müller, 2019). This shows that then company deals with issue of reduced goodwill and negative
reputation in the market.
Background of the organisation
The chosen organisation for the existing report is Tesco. It is considered as largest
supermarket chain in the United Kingdom. The headquarters of the organisation is located in
Welwyn Garden City, United Kingdom. The founder of the organisation is Jack Cohen and this
was founded in 1919, East End of London. Some of the subsidiaries of Tesco are: Tesco Mobile,
Tesco Bank, Tesco Ireland and MORE. The company holds third position among the retailers in
terms of gross revenues.

LITERATURE REVIEW
It is the chapter that focuses over addressing each research question through second-hand
information. It includes secondary data accumulated from books, articles, journals, newspapers,
magazines, publications, already conducted surveys and interviews and many more.
What is the concept of national minimum wages in UK's organisation?
According to Bargain, Doorley and Van Kerm (2019), the minimum wage an employee
must get depends upon their age and the other one is if they are an apprentice. In simpler words,
it is the minimum pay per hour almost all employees are entitled to. It has been now over almost
20 years since the National Minimum Wage was commenced and implemented in the United
Kingdom. The major purpose of introducing this particular system was to end exploitative low
pay. It also focused over redressing power imbalances between workers and employees at the
lower end of the labour market. Low Pay Commission is mainly responsible to recommend every
year to the Government the annual rises applicable to the various rates of NMW and to review
the minimum wage's impact over economy of the United Kingdom. UK has introduced its very
first official minimum wage in the year 1999 (Dube, 2019 ). This move was taken for tackling
challenges of low pay across the whole nation and assist in stimulating economic growth. The
starting rate was £3.60 an hour for those individuals who are above the age of 22. The minimum
wage is generally reviewed annually and calculated on the basis of wage per hour. The
Government depends upon independent body known as Low Pay Commission for taking advice
in relation to minimum wages and then only sets the minimum wages. There is great difference
between living age of the United Kingdom and minimum wage of the United Kingdom. The
differences between the both are confusing and it can be explained as National Minimum Wage
is one of the mandatory pays for all those individuals are in employment between the age of 16-
23. This is one of the compulsory criteria and which is generally set by the Government of the
United Kingdom. The national minimum wage for individuals who have crossed the age of 23 or
over is increased to Euro 9.50 in the declared budget. The changes in the minimum wage has
established and come into an effect from 1st April, 2022.
As per the view of Bimpong and et. al., (2020), Tesco is the company which focuses over
following the rules and regulations stated in the National Minimum Wage Act, 1998. This is the
organisation that guarantees that every employee of the company should get minimum wages for

their efforts and performance. One of the greatest concern of every organisation is that every
employee must get minimum wage for their work. It directly impacts the performance of the
employees when they get right wages and pays. Thus, company focuses over offering minimum
wage to each employee so that they can be easily retained in the company for long run.
As per the view of Datta, Giupponi and Machin (2019) , national minimum wage is defined as
the less hourly rate that is licensed by the government that an employer can pay to its employees
that are working in the company. It is simply the minimum amount of money that can be given to
an individual for doing any type of work in an organization. In simple words, national minimum
wages can be defined as a the minimum amount of money or remuneration that an employer of
the company is required to pay to the employees for the work they perform in a particular time
period, which cannot be decreased by an individual contract or collective agreement. The main
purpose of the minimum wages in the company is to protect the interest of the employees that are
working in the organization for a certain time period (Lloyd and Payne, 2019). This helps in
ensuring employees that they are receiving some amount of money for the services that they
perform in the UK organization that helps in gaining equal share for progressing. Minimum
wages provided by the company also helps in eliminating he chance of poverty and helps in
reducing inequality among men and women by promoting the right to equal pay for all the
employees irrespective of the gender. The system related to minimum wages should not be used
or seen in isolation, but must be designed in an effective manner to reinforce and supplement
other employment and social policies. Understanding the concept of average salaries and
national minimum wage is considered as an important part of finding and retaining good work in
the business market. Under the Labour government, the government of the UK has introduced its
first reliable and official national minimum wage in the year 1999. the initial rate related to the
minimum wage was £3.60 per hour for those persons who are above 22 years of age which also
results in increase in the amount of wages with a particular time period. The minimum wage that
is determined by the age bracket that fall into 1st April 2022 is defined as under:
£6.83 (Between 18–20 year age)
£4.81 (under 18 and apprenticeships)
£9.50 (23 year plus age – which is also known as National Living Wage)
£9.18 (Between 21–22 year age)

Accommodation provided by the employer of the UK organization to the employees can be taken
into consideration while calculating the minimum wage rate. Any other benefit that the UK
organization provide to their employees such as transport, food, childcare vouchers is not
included in the in the count of minimum pay. Cover charges or service charges that are directly
charged from the customers also do not effect the minimum wage amount or entitlement that the
employee receive by the company (Cook and Grimshaw, 2021). As compared to other countries
existing in the world, the national minimum wage in the UK is ranked among the 7th highest in
all over the world in the year 2020.
What are the policies of worker's pays and salaries by Tesco?
As per the view of Minère (2019), Tesco is considered as the company which focuses on
following all the important rules and regulations that are mentioned in the National Minimum
Wage Act, 1998. It is the responsibility of the company employers that they will provide every
employee wit the basic minimum pay for the efforts and hard work they performed for the
particular task. The main concern of every company is that they check on whether the employees
working are receiving the minimum wage for the work that they are doing. This impacts the
performance and productivity of the company directly as they will get right payment for the
work that they are doing. Employees are more happy and motivated when they receive money
for the hard work that they are giving in completing the given task of the company and for this it
is important for the employers of Tesco to focus on providing efficient pay for their best work.
Employees are considered as the most important asset of the company as they are responsible for
achieving success and and high growth in the highly competitive business market (Carty, 2019).
The following policies for the pay and salary of employees by Tesco is defined below:
 Minimum wage – Employees above the age of 16 years or over are legally entitled for
getting national minimum wage per hour (Fadeyi, 2020). This mainly includes agency
workers, casual labourers, home workers, probationary workers and part time employees,
employees on short term contracts basis and employees employed by subcontractors.
Tesco ensures that every employee ho is hired in the company for carrying out the
operations of the business are getting minimum wages according to the work they
perform in the company. This helps in motivating employees of the company for
increasing their working efficiency in order to achieve the strategic goals.

 Regular pay and salary – All the employees are eligible and are entitled to get paid by
the company for the work they perform. The employees of Tesco are also legally entitled
to be paid the amount of money that they receive for the hard work and effort that they
put for achieving the desired goals and objectives of the business. Regular pay is
necessary for all the employees of the company as it helps in keeping them motivated in
the company. It is important for the company to provide regular pay all its employees as
it helps in improving their working efficiency and effectiveness for accomplishing the
goals and objectives in the competitive business environment (Franck and Prapha, 2021).
The minimum wages are dependent on the contract signed with the employee at the time
of recruitment and selection. A written document is send by the employer of the company
at the time of deciding about the wages that they need to be provided for the work they
will perform in the business so that employees have full right to question to the employer.
What is the problem faced by organisation in context of national minimum wages scandal?
As per the view of Morgan and Hauptmeier (2021), the impact of national minimum
wages on the overall performance and productivity of the business. National minimum wages in
considered as an important concept in Tesco as it helps the company in improving the morale
and motivation of employees for better productivity and growth in the competitive market.
National minimum wage is defined as the lowest rate of amount that the company pay to its
employees for doing the work in an effective and proper manner. It is important for the company
to decide the rate of minimum wage for the employees so that they work with high efficiency
and capability. There are several problems that Tesco faces because of the national minimum
wage scandal and which is defined below:
 Increased cost of labour – The main issue that Tesco faces with a national minimum
wage rate is the increased cost of the labour. If the company is not driving and motivating
employees by giving the minimum amount of money to employee, then any hike in the
minimum wage rate can make the employees of the company unhappy and demotivated
with the compensation and results in forcing the company to raise their rates for making
employees happy (Graham and Anwar, 2018). The company needs to pay more amount
of money to the labours of they are not available easily and results in paying high amount
of minimum wage.