Jonathan Rennie, an employment partner at Edinburgh-based TLT Solicitors, tells us what to expect from today’s National Living Wage roll-out
From today (1 April, 2016) employers will see the implementation of new statutory pay obligations for employers.
In addition to the long established national minimum wage regime, from 1 April 2016employers will also have to ensure that they are complying with the National Living Wage. This imposes a minimum hourly rate of pay for employees of 25 years of age or over, of £7.20, which is 50p higher than the existing minimum wage rate for that age group.
Concerns have been voiced by employers as it will have a large impact on staff costs. Employers may, consciously or unconsciously, look to employ younger people to avoid the higher wage costs. Also, if they operate zero hours contract, they may elect to offer less work to those people over 25. Both of these actions would expose the employer to age discrimination claims.
What should employers do to prepare?
This is clearly a major issue for employers, particularly those operating in industries where a large section of the workforce work on minimum wage levels. With the increased cost of employing over 25s you need to:
Conduct an audit of your pay structures if you have not already done so, to understand the financial implications of this new law.
Ensure that minimum pay levels are being met to avoid claims from employees and fines, as the penalties for breaching the minimum wage provisions have been doubled under this new regime.
Ensure that at an operational level there are no practices in place that could give rise to age discrimination claims, given the higher wage costs of employing those over 25.