Will the National Living Wage be a blessing or a burden?
20th August, 2015
Sally Gwilliam, Senior Employment Solicitor
When the introduction of the National Living Wage was announced in the Budget this year, it was met with the usual division of cheers and boos. Specifically, those business leaders and investors in the retail, hospitality and care industry had significant concerns about its impact as share prices fell on the news.
Today, in a letter to the Chancellor, the five largest providers of care homes in the UK warned that the introduction of a national living wage could result in a “catastrophic collapse” in the number of care homes. The care home companies said that the living wage could cost the care sector an additional £1bn by 2020. Closure of care homes and a significant reduction in home care would result in an even bigger strain on the already struggling NHS to provide alternative care for elderly and frail individuals in need of care and support.
The national living wage is due to be introduced in April 2016, and will be paid to all part time and full time workers aged 25 and above. It will be set at £7.20 an hour, with a target of it reaching more than £9 an hour by 2020. With only 1,700 employers currently signed up to the voluntary living wage scheme, this new compulsory rate is set to be one of the biggest changes and challenges to employers next year.
However, it’s not just the care sector with significant concerns about its impact, hospitality companies, retailers, and small business owners alike are all worried about how they will pay for this increased cost.
At Genus Law, we recognise that employers impacted by the living wage need to make decisions now, to mitigate the additional cost associated with it. We can help advise on these strategies and the legal implications that may arise from different approaches, including reorganisation of the workforce, changes to employee’s global benefits packages, the focussed employment of younger workers (including apprentices – and mitigating the risks of potential discriminatory practices in this area), and the revision of recruitment policies.
If you would like to discuss the changes further please contact Emma Hammond or Sally Gwilliam from our Employment Law team or call 0113 320 4540.