TUI Travel is scrapping its annual salary review for UK staff amid news that rival Thomas Cook is awarding staff a performance-related pay rise of 1.5%.
All TUI Travel's 19,000 UK staff, including senior management, are affected. It follows reports that 1,800 TUI staff in Germany have had working hours cut for a four-month period.
But a spokeswoman said UK staff pay was being reviewed in an ongoing process, which could mean some wage rises.
She added: "There will not be an inflationary pay rise but we are reviewing retail and overseas staff pay and there may be some rises. We are benchmarking ourselves against best practice and other companies."
However, performance-related schemes are still in place. For the year ending September 30 2008, group chief executive Peter Long received a performance-related bonus of £1.2 million, taking his total salary to just over £2 million.
TUI Travel's cautious approach in the current climate contrasts with Thomas Cook's decision to award a performance-related 1.5% rise to its 15,000 employees, except for pilots, from April 1. Last year staff received a 4% rise. The average Thomas Cook salary is £17,000.
A spokeswoman said: "We have made a commitment that the least affected [part of the business] will be staff."
She added the company was continuing to negotiate hard with suppliers to reduce costs and that the pay award followed solid trading figures.
However, the pay rise is performance-related, which could mean some staff may not receive any rise at all this year.
Travel trade union TSSA claimed most staff would not receive 1.5%. The union added that it could not rule out industrial action after 80% of its members voted against the pay award.
The union represents around 1,500 shop staff and had recommended members accept the rise on the basis that other issues, such as overtime hours, were addressed.
Regional organiser Jessica Fenn, who has national responsibility for Thomas Cook, said: "Industrial action will certainly be a consideration."
Last year Thomas Cook chief executive Manny Fontenla-Novoa received a performance-related bonus of £5 million and a pay rise of 34% to £850,000 for the year to October 2008.
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