On 1st April 2016 the government’s new mandatory National Living Wage
of £7.20 per hour for workers aged 25 and above will become law. Paying
a worker less than the National Living Wage will be a breach of
National Minimum Wage (“NMW”) legislation which could lead to fines
and/or an organisation being named and shamed by HMRC.
supply workers and pay them on or around the current NMW of £6.70 per
hour you will need to consider how this increased cost will be met.
Will you be able to increase your charges to hirers, or is this
something that will eat into your existing margin? How you address this
is likely to depend upon how your client contracts are drafted, and
whether your contracts include a right to increase rates where costs of
The cost of the National Living Wage could also
squeeze the profit margins of businesses further down the supply chain
as their costs may also increase. The effect may however be lessened by
the changes umbrella companies will already be making to their models to
account for the changes to tax relief on travel and subsistence
expenses which are also taking effect from April 2016.
National Living Wage rate only applies to those aged 25 and over,
leaving younger workers only entitled to the current NMW. Organisations
should therefore not only take legal advice on their contracts and HR
strategies but also and ensure that employees receive appropriate
training to avoid discriminating.
If you have any questions on the
National Living Wage, or need assistance with training or contractual
matters please contact Lawspeed on 01273 236 236.