Asda accused by EG Group of threatening to reduce pay for 7,000 employees before possible merger

Asda is accused of using “fire-and-rehire” to threaten 7,000 employees in order to reduce their pay as they restructure the business ahead of a possible merger between EG Group and Asda.

The supermarket told thousands of employees that they would lose their location-based pay supplement and lower hourly rates if they worked nights in 39 stores.

The GMB union warned that workers who refused to agree could be fired. They also said the restructuring would help pave the path for a £12 billion merger with the UK petrol station business of the Issa Brothers. Asda owns its own chain.

According to the GMB, shop staff with 22-hour contracts lose £686 per year. Staff on 37.5 hour contracts lose £1,700. Asda claims that the overall pay is going to increase because they are increasing their hourly rates from £11.11 an hour to £11.686 per hour.

Asda is planning to implement the changes by November and offers compensation payments to staff affected. The supermarket said it was no longer necessary to pay location supplements to lure staff to specific shops, and that this additional payment was unfair to other colleagues. Asda’s spokesperson said the location supplement “was out of line with the retail market in general” and “no decision had been made”.

Mohsin Issa and Zuber Issa, with the help of their private equity investors TDR Capital, own Asda and have grown EG Group to become a global oil business with revenues exceeding $33 billion annually. They are looking at a deal to help EG Group reduce its heavy debt burden.

Moody’s warned that EG Group could face further downgrades if its brothers fail to find a way to solve the debt problem by the end next month. The lion’s portion of the debt is due to mature in 2025, as interest rates are rising sharply.

GMB said the restructuring was to prepare for a merger between Asda and EG Group’s petrol stations business

Asda told union reps that workers in the shops would not receive a payment for signing up to new contracts.

In the briefing documents, it was stated: “We would like to be able agree with all of our colleagues on this change, but if they don’t, we will issue a contractual notice to their current terms and conditions and offer them re-engagement under the new contract. The colleagues in these situations would not be entitled to a compensation payment.”

GMB fears that an Asda/EG merger will lead to cost cutting and a reduction in staff benefits. Nadine Hutchon, a GMB organiser said: “The billionaire Issa Brothers and their business partners are restructuring Asda to prepare for the debt-laden merge they are trying push through with EG Group.

The merger will accelerate these slash-and burn tactics and increase fuel and goods prices. TDR and Issa Brothers will use Asda’s revenue to pay down their debt mountain. This money should be invested into stores, co-workers and ensuring that there is proper competition on pricing.

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