A grand unveiling of a new Business Class seat by Virgin Atlantic due to take place on 8th April could be overshadowed by the prospect of strike action by the airline’s cabin crew according to reports in the UK’s Telegraph newspaper. Cabin crew, who have been described as “angry” by the newspaper, are said to be up in arms over a new pay deal that may see their wages drop below Britain’s minimum wage.
As we revealed at the start of March, Virgin has been negotiating a new pay deal with the cabin crew union but the offer that has been tabled could see allowances dramatically cut. Like many airlines, Virgin Atlantic offsets its tax obligations by paying cabin crew a combination of a taxed basic salary and untaxed ad diem allowances. The new pay deal would see average annual allowances of around £7,500 cut in half.
It’s understood Virgin was forced to revisit how its pay’s cabin crew after the airline consistently failed audits by tax authorities in the UK. Cabin crew were expected to prove the allowances they received were being used on food, drink and other necessities but failed to convince Her Majesty’s Revenue and Customs (HMRC) – As a result, the authorities have imposed pre-approved allowances that fall well short of what Virgin was paying crew.
The drop in allowances has been offset by a proposed increase in basic salary by the airline of around 3.7% but that will still mean a wage drop in real terms.
It’s important to point out that while the cabin crew union says this was all prompted by interference from the taxman, Virgin Atlantic maintains that this is not the case. The airline told us that the negotiations are part of a routine pay review that had been planned for some time and talks have been going on for several months.
A spokesperson told us that while they “cannot disclose exact details, the proposal would be an increase on our current Cabin Crew salaries.”
The situation has been made more complicated by the fact that the union currently supports some elements of the deal, while many crew are said to be opposed to it. The Unite union has described the increase in basic pay as “industry-leading” but solicitors are now looking into the proposed pay structure to make sure it’s compliant with minimum wage laws.
There have even been allegations that the union has colluded with management in order to “feather their own nests”.
As it stands, Virgin’s cabin crew have made it perfectly clear that they’re not happy with the current deal. It’s far too early to suggest a strike could happen as suggested by The Telegraph – the union has gone back to Virgin in a bid to secure a fairer deal and isn’t prepared to ballot its members until it’s exhausted every avenue.