From 1st April this year the national living wage (NLW) is introduced and will affect millions of the lowest–paid workers in the UK. What does this mean for your business? And what is the difference between the living wage, the national living wage and the national minimum wage?
The national minimum wage is probably the most commonly known and was introduced under the Labour government in 1999 as a means by which all workers would be receive a national minimum wage. At the time there was much controversy and threats of jobs being at risk. In order to ease fears, a number of different rates were introduced, which still stand today, for age categories of Over 21, 18-20, 16-17 and Apprentice rates.
The UK (voluntary) living wage foundation has lobbied governments to increase the minimum wage to the living wage foundation’s own non-statutory living wage which is currently £8.20 per hour for all those outside London and £9.40 for those living in London. It has been signed up to, on a voluntary basis, by a number of organisations and many public sector organisations also pay the living wage.
The national living wage (NLW) is being introduced this April because, according to George Osborne, “Britain deserves a pay rise” although unfortunately this pay risk will only apply to those who are over the age of 25. Again, there has been much controversy with many employers facing significant increases in their pay bills and concern that employers will look to employ under-25s in order to avoid paying the increase in hourly rate. If this is the case, it will be vital for employers to adopt fair recruitment and selection interviews and keep thorough notes on decision making in order to rebut any potential age discrimination claims.
With penalties being imposed of up to £20,000 per worker paid incorrectly, and HMRC checking up on NLW payments, employers must pay close attention to the introduction of the NLW.
What the longer term impact of this will be on business longevity remains to be seen as well as to what extent this will affect the recruitment of younger workers in to Britain’s workforce.