A Management Report: Minimum Wage Impact on Tesco Plc Performance

This management report examines the impact of minimum wage on employee performance at Tesco Plc. It begins with an abstract highlighting the benefits of minimum wage, such as improved motivation and job satisfaction, while acknowledging the potential increase in labor costs. The report includes an introduction, a literature review exploring the concepts of minimum and living wages, and their benefits for employees. It analyzes human resource practices related to minimum wage, identifies challenges such as employee grievances and increased labor costs, and suggests recommendations for overcoming these issues, including the development of HR policies and training programs. The report concludes with a summary of findings and recommendations for Tesco Plc, emphasizing the importance of complying with government regulations and providing fair wages to retain employees and satisfy their basic needs. The report also includes a time scale, costings and prioritization for implementing the recommendations.

Management report

ABSTRACT
It has been found out that minimum wages helps to fulfil basic needs of the
workers. Minimum wage rate offers various benefits of employee's like improve the
motivation level, job satisfaction level etc. One of the major issue related with implementation of
the policies related with minimum wage is that it increases the labor cost for the company.

Table of Contents
ABSTRACT.....................................................................................................................................2
INTRODUCTION...........................................................................................................................4
Aim..............................................................................................................................................4
Literature Review.........................................................................................................................4
Human Resource practices in the area of minimum wage...........................................................7
Conclusion and Recommendation...................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The term minimum wage is defined as the amount of remuneration that an employer is
required to pay to the employee's for the tasks they have performed during a specific period that
cannot be reduced either through individual contract or collective agreement (Atkinson and et.al,
2017). The value of minimum wage is that it helps to protect workers against unduly low
payment by the company. It helps to ensure equitable and fair share of the fruits of progress to all
the people. The Report is based on Tesco Plc. It is headquartered in England. The firm belongs to
Retail industry. The Report will outline the meaning of management report, literature review on
minimum wage, the practices of human resource in the area of minimum/living wage.
Tesco Plc.
It is a multinational general merchandize and groceries company that is located in UK.
The operating income of Tesco in year 2019 is £2206 million. In year 2019, total number of
employee's of the firm is 450000 (Guo and Wang, 2019).
Aim.
“To analyse the impact of minimum wage on the performance of employee's - A study on
Tesco Plc.”
Literature Review.
Theme 1 : To analyse the concept of minimum/living wage.
According to Grimshaw (2016) the term minimum wage refers to the minimum income
that is provided by the organization to the workers that are essential to meet out the basic needs
of employee's such as housing, food, clothing etc. As per the regulations in UK, living wage
means that the individual working for 40 hours a week with no extra income should be capable
of affording for a modest but decent life such as utilities, shelter, food, healthcare, transport etc.
Further, living wage also means that the wage equal to poverty line for a family of four
members. As per the view of Hayes (2015) the major aim of the system of minimum wage in the
organizations is to safeguard workers against unduly low pay. It also helps to ensure an equitable
and fair share of the profitability of firm to all the people who are working in the organization.
The National Minimum Wage is the minimum amount per hour to all the employee's who
are entitled to. The National living Wage is more than the amount of National Minimum Wage
that workers receive if they are above the age of 25. Joo-Ee (2016) pointed out in their paper

that, The National Minimum Wage Act, 1998 defines the basic legal framework for the
minimum wage to all the workers in United Kingdom. It provides hourly rate lower than which
adult employee's in most of the segments of British economy should not be paid. The entitlement
is applicable to the workers of age 21 and more. While lower minimum wage rate is applicable to
the workers of age between 18-20 years. From October 2012, the wage rate for workers of age
21 and above is £6.19. For workers whose age is in between 18-20 years, minimum wage rate is
£4.89 and for employee's between the age of 16-17 years old the minimum wage rate is £3.68.
For apprentices whose age is below 19 wage rate is £2.65. Kavanagh and Johnson, Eds., (2017)
critics that, there are various economists and conservative parties who claim that the Act will
reduce economic competitiveness and destroy jobs. National Minimum Wage will have the
greatest impact on those sectors that are historically low paid. Further, Low Pay Commission
focuses on retail, cleaning and security, hospitality, social and child care, clothing and footwear
etc. Low Pay Commission suggests that the difference in gender at the low end of the income
scale will be considerably closed by the National Minimum Wage.
Theme 2 : To evaluate the benefits of minimum wage for employee's.
According to Meer and West (2016) the minimum wage rate provides various advantages
to the workers that working in a particular organization. It provides various benefits such as
minimum wage rate provided by the employers helps to reduce the poverty, improves standard of
living, boost employee morale, reduces the level of inequality and also helps to improve the
motivation level. Workers that receives adequate level of compensation are having capability to
feed themselves and family members, are able to clothe, live in better houses etc. Further,
minimum wage laws of the country also helps to safeguard workers against exploitation by
unscrupulous employers.
As per the view of Morales-Zurita, Medina and Morales (2016) when companies pay
minimum wage rate to the employee's, they can enjoy their physical as well as mental health.
When workers remain healthy their level of performance also gets improved. They remain
happier and motivated to improve their level of skills. Further, minimum wages also offers
various benefits to the organization as well. Such as high level of productivity, profitability etc.
Motivated employees are also more likely to engage career advancement in their respective
workplace rather than exiting the organization as soon as they receive a better offer from other

firms. This helps employers to promote and train their workers from within the business which is
generally involved less risk than recruiting someone from outside the business.
According to Noe and et.al, (2017) workers also remain motivated for job hunt. Without
minimum wage rate, the employee's who are less skilled are not able to expect when they go out
for the purpose of job hunting. The efforts of searching job can be offset by the low wage offers
the employee's would receive and this will be more effective for low skilled employee's to
remain on public assistance. With the help of minimum wage the workers can easily compare the
income generated by the job to what is received by public help, and then they get motivated to
look for a job. Further, minimum wage rate also help to improve the level of morale of the
workers. They remain satisfied with the payment.
Due to this, the employee's make efforts to improve the level of performance. When there
is minimum wage rate for the workers that are working in the organization, then there is a
baseline incentive which helps to motivate people to perform their tasks and responsibilities.
Employee's offers better productivity when their core needs are satisfied. If the needs of people
for clothing, home, food and other basic things are met out then they will focus more on work
instead of worrying about making ends to meet those needs.
Theme 3 : To identify the issues faced by human resource department in providing minimum
wage to the workers.
According to Reeves and et.al, (2017) there are various challenges that human resource
department faces in providing minimum wage to the employee's. The employer have to face
issue of employee grievances related with minimum wage. One of the major issue related with
implementing the policies related with minimum wage is that it increases the cost for the
company. In case there is no proper policy for providing minimum wage to workers in that case,
it is possible that employee's may file a complaint regarding immediate supervisor in case there
is no policy for providing minimum wage to workers.
As per the view of Morales-Zurita, Medina and Morales (2016) if the labour market is
competitive in that case, minimum wage can create the situation of unemployment in the country
because company will demand less labour that may motivate more workers to supply their
labour. Another issue is that, minimum wage may leads to increase in the cost of labour for the
firm. It is very difficult for companies operating in the industries such as retail industry in which
margins are already low and a lot of workers earn minimum wage. Other than this, human

resource department also faces challenge while implementing policies related with minimum
wage such as National Minimum Wage Act, 1998, policies of Low Pay Commission etc.
Keeping up and making changes in the organization policies and programmes is a major struggle
for the employer of the business. There are various firms that chooses to ignore the rules and
regulations of government for which they have to face various consequences such as lawsuits,
audits and demise of the firm etc.
Further, human resource department also faces various challenges in recruiting the
employees that are having knowledge of rules and regulations of acts and policies developed by
the government in relation with providing minimum wage rate to the workers. Further, human
resource manager is also required to provide training to the management for creating awareness
of implementing the policies related with minimum wage to the workers. Moreover, company
should have sufficient resources for providing minimum wage to the workers such as annual
bonus, basic pay, performance pay etc.
Theme 4 : To suggest the recommendations for overcoming issues faced by human resource
department in offering minimum wage to the employee's.
According to the author Noe and et.al, (2017) no matter whatever be the size of company,
it is important to comply the laws developed by the government for providing just and equitable
pay to the workers. Human Resource Department should develop and implementing plan and
policies
related with minimum wage to the workers. So that, company will not have to face negative
consequences of non-compliance of the laws and regulations of the government.
Further, HR Department should also make efforts to bring a change in the management of
the company such as structure, process and strategies of the business in respect of providing
minimum or living wage to employee's.
Human Resource practices in the area of minimum wage.
Firms that underestimate the value of managing minimum wage and salary of workers
have to face high rate of turnover and low level of employee morale and retention. Human
Resource Manager of Tesco Plc. should review the policies and practices related with minimum
wage of the workers. Compensation policies and practices may include processing deductions,
salary deductions and employee contributions to stock purchase plan, savings accounts and
health benefits etc ( Meer and West , 2016).

Further, management should review the structure of minimum wage and salary for
competitive pay practices.
Conclusion and Recommendation
Conclusion-
It has been concluded that the main aim of the system related with minimum wage in the
organizations is to safeguard workers against unduly low pay by the employer. Minimum Wage
helps to satisfy the basic needs of the workers.
Recommendation-
It has been recommended that conduct training and development programmes for
management that will help company to implement policy and procedure for providing minimum
wage to the workers that are working in the company.
Rationale-
The recommendation is given because it will help human resource department of Tesco
to provide fair and equal wage rate to the employee's. This will help to retain workers in the
organization. Further, minimum wage will also help to satisfy basic needs of the employee's.
Time scale-
Activities Week 1 Week 2 Week 3 Week 4 Week 5 Week 6
Selection of
topic
Choosing
organization
Writing
literature
review
Consideratio
n of HR
practices
Writing
conclusion
and
recommend
ation

Costings
To implement the recommendation in the organization, the firm is required to raise funds
from various sources that will help management to conduct training programmes for managers to
implement minimum wage rate policies. It will require financial, human and material resource.
Prioritization-
1) Development of policies and programmes for implementation of minimum wage rate policy.
2) Complying to rules and regulations of government in respect of minimum wage.
3) Conducting training programmes.
REFERENCES
Books and Journals -
Atkinson, A.B., and et.al, 2017. Reducing poverty and inequality through tax-benefit reform and
the minimum wage: the UK as a case-study. The Journal of Economic Inequality. 15(4).
pp.303-323.
Grimshaw, D., 2016. Minimum wage. Edward Elgar Publishing Limited.
Guo, L. and Wang, Z., 2019. Ratio Analysis of J Sainsbury plc Financial Performance between
2015 and 2018 in Comparison with Tesco and Morrisons. American Journal of Industrial and
Business Management. 9. pp.325-341.
Hayes, L.J.B., 2015. Care and Control: Are the National Minimum Wage Entitlements of
Homecare Workers at Risk under the Care Act 2014?. Industrial Law Journal. 44(4). pp.492-
521.
Joo-Ee, G., 2016. Minimum wage and the hospitality industry in Malaysia: An analysis of
employee perceptions. Journal of Human Resources in Hospitality & Tourism. 15(1). pp.29-
44.
Kavanagh, M.J. and Johnson, R.D. eds., 2017. Human resource information systems: Basics,
applications, and future directions. Sage Publications.
Meer, J. and West, J., 2016. Effects of the minimum wage on employment dynamics. Journal of
Human Resources. 51(2). pp.500-522.
Morales-Zurita, L.F., Medina, D. and Morales, L.F., 2016. Labor fluidity and performance of
labor outcomes in Colombia: evidence from employer-employee linked panel. Borradores de
Economía; No. 926.

Noe, R.A., and et.al, 2017. Human resource management: Gaining a competitive advantage.
New York, NY: McGraw-Hill Education.
Reeves, A., and et.al, 2017. Introduction of a national minimum wage reduced depressive
symptoms in low‐wage workers: a quasi‐natural experiment in the UK. Health economics,
26(5), pp.639-655.