Are you prepared for the National Living Wage?
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.
If you
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
supply increase.
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.
The new
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.
Adrian, a highly experienced lawyer, founded Lawspeed in 1997. He is responsible for developing our extensive portfolio of products and services, including the widely used Lawspeed contract templates. Adrian is an expert on “recruitment law” and specialises in contracts, regulatory compliance, employment status and dispute handling. He is chair of the trade body the Association of Recruitment Consultancies, the only lawyer lead recruitment trade body in the UK. Adrian and his co-director Ravi devised Standards in Recruitment as a vehicle for helping drive up standards and compliance in the industry.
Adrian is our lead in discussions with the government over regulatory evolution. Apart from assisting with client support, Adrian’s primary role is research and development into methods of business delivery, our latest service Proterms being his most recent project. Adrian heads our IR35 lawyers team.