What does the national living wage mean for employers?

What does the national living wage mean for employers?

As of April 1st, all employers in the UK will be required to pay their staff aged 25 or over what is more commonly known as the national living wage, which adds a new tier to the minimum wage. It will mean staff being paid an hourly rate of £7.20, but while this will be of huge benefit to employees, what does it mean for companies, and what do they need to know as the change comes into effect?

Budgeting

There’s never been a better, or more vital, time for companies to be looking at their budgets moving forward. The increase in the minimum wage will mean additional costs for some companies, and also there could be an added expenditure of pension auto-enrolment. For these reasons, working out what you can afford as a company is important, as is putting the necessary budgets in place.

If the change in wages and auto-enrolment is going to mean your company will lose out financially, iit may be sensible to look at streamlining ther services and providers you currently use to help with this added cost and look at others.

Discrimination

When you’re dealing with the national living wage, it’s important to be sure that you cannot be accused of discriminating against people of a certain age. Because the new wage of £7.20 only applies to people who are aged 25 or over, there’s a temptation for companies to only employ people who are aged 24 or younger. However, this could leave you open to claims of discrimination, and remember this could mean an added expense for your business in terms of management time and costs.

Employees

Not everyone will know about the changes that are in force from April 1st, so as an employer your starting point would be to discuss it with all of your staff to make sure everyone is informed. It can help to raise morale among those who are about to start earning the higher wage, while those who aren’t will be able to learn why not, meaning they won’t feel left out, or asking questions affecting staff morale.

Penalties

Of course, when anything changes in employment law, it’s important to know what can happen if you don’t comply. For any company that does not pay their staff the new national living wage, there are severe penalties in place. Anyone not complying may be potentially liable for a fine of up to a maximum of £20,000, as well as having to pay any affected staff 100 per cent of the wages they have missed out on. With this in mind, it’s important to get it right, and consult an expert if you have any areas of the new regulations you’re unsure about.

 

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Jane Crosby

Partner, Dispute Resolution

Jane is an employment and commercial litigation solicitor of more than 15 years' experience. Prior to entering the legal profession, Jane was employed in the...

Partner, Dispute Resolution

Jane Crosby

Jane is an employment and commercial litigation solicitor of more than 15 years' experience.

Prior to entering the legal profession, Jane was employed in the aviation industry. This experience is appreciated by many of Jane's clients who note that she is able to take a commercial and pragmatic approach to any legal issue that they face.

Jane acts for a wide range of individuals and businesses and her areas of specialism include aviation, property related industries and IT. Jane regularly advises on aspects of employment law, such as settlement agreements, employment contracts, policies and procedures, redundancies, equal pay, data protection, issues arising from TUPE and reorganisations, the calculation of holiday pay, bonus and commission payments, disciplinary and grievance issues, dismissal and termination issues, the protection of confidential information and the enforcement of restrictive covenants. Jane gets involved in GDPR training for her clients and she is able to deliver tailored employment law training sessions upon request.

As a commercial litigation lawyer, Jane also deals in shareholder and directors disputes, commercial contract disputes and the enforcement of restrictive covenants.

Jane has been involved in successful high value commercial litigation for clients in the High Courts, she is an accredited mediator and she is a member of the Employment Lawyers Association.

Jane is often asked to write for a number of well known publications, including The Daily Mail, The Telegraph and The Week and she has been interviewed on BBC Radio 4.

Here is small selection of the feedback that Jane has received:

“Jane, I cannot sincerely thank you enough for your wise counsel and am delighted to have made your acquaintance. If I am blessed with a new position somewhere I will hand over my contract in the first instance to you. Likewise, any of my friends, peers, romans and countrymen wanting advice, I will point them in your direction.”

“Jane, you have been most resilient on my behalf for which I sincerely thank you for all your endeavours. I have a tremendous working relationship with Hart Brown and you have undoubtedly compounded this further."

“I appreciated the clarity of advice given at a stressful time”.

“A sensitive and highly professional approach and efficient work in the interests of the client”.

“Your advice, conduct and assistance have been indeed outstanding and very professional but also – and most importantly – very humane”.

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Hart Brown Solicitors is the trading name of Hart Brown LLP registered in England and Wales No. OC 425835 whose registered office is Resolution House, Riverview, Walnut Tree Close, Guildford, GU1 4UX and is authorised and regulated by the Solicitors Regulation Authority (SRA) No. 658593. Members: N Maud, T Pearce, D Knapp, R Campbell and P Grimwood, Partners: J Crosby, L Harrhy, J Jupp, J Lamont, T Mandelli, V McMurtrie, E Moore, S Osborne, S Powell, G Sanders and E Wiggins.

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