National Living Wage – Avoid issues

The National Living Wage has been introduced on 1st April 2016 which has crept up extremely quickly! It seems relatively straight forward at first glance, an increase to £7.20 per hour for anyone 25 years and older, but it actually requires more attention than you may first think.

Here are a few handy tips to be aware of:

• Although the law came into effect on the 1st April, it does not necessarily mean that all workers who are 25 and over will get their pay rise from that day. It will be operated around pay reference period system meaning if workers are paid monthly, the pay reference is a month etc. For example, if your workers are paid monthly and your pay reference period runs from 26th of each month, then you must start paying the living wage on the 26th April
• This will also apply when employees reach 25, they will be paid it from the first pay reference period after their 25th birthday.
• Ensuring that you are ready and prepped will help diminish any errors from happening.
• Evaluate the impact it could have on existing pay scales. There is no legal requirement to maintain your employee pay scales that may be disrupted by the living wage and may lead to some complaints from higher paid employees. This may be something you want to take into account however, unless stated in their contractual agreement, you are under no obligation to increase others pay. Remember, the living wage is a legal requirement, not a representation of employee’s skills.
• Be aware of any age discrimination claims. It is always good to be aware of any potential claims that could arise during such changes. Being mindful that if you were to dismiss someone as they reach their 25th birthday purely because of their age it would be automatic unfair dismissal and age discrimination.
• Remember there are fines for employers who fail to pay.

It is quite easy to not give much thought about the details when first approaching the national living wage changes, however with the above in mind it is important to ensure you’re ready for the potential change to your business!

Preparation is key and should you need help or any advice on this matter, please do not hesitate to contact us today on 0845 458 5881.