The living wage is the amount of money an adult person needs to earn in order to cover the cost of living. Before the election we mentioned how this might become a big issue and now the dust has settled the government has outlined its plans. This is currently calculated at £8.25 outside of London and £9.40 in London.
From 1st April 2016 the minimum wage will change from having four rates to five. In practical terms this means the current 21+ NMW will become the 21-24 NMW and a new National Living Wage (NLW) of £7.20 will apply to over 25s.
Many large employers including; Sainsbury’s, Nestle, Chelsea FC and Burberry and now Lidl have adopted either the Living Wage or NLW but many have warned that this will impact on the consumer as prices will rise. Ironically if prices do rise then the living wage will need to be recalculated and rise to accommodate the rise in prices, meaning this may not be the best approach from employers. Thankfully Lidl have pledged that paying the Living Wage will not impact on their prices and thus will actually be paying a living wage. Bravo.
Whilst it comes into force on 1st April, many people will not feel the benefit until their next pay day, most likely at the end of April. This gives any employers who are yet to have the procedures in place some extra time to organise themselves.
Any employer who dismisses or deliberately don’t employee someone because they are over 25 and thus will have to be paid more than a younger employee will be liable to an age discrimination claim. Furthermore any employer who doesn’t pay all eligible employees the NLW will be be treated in the same way as those who do not pay the NMW.
For advice about the living wage please click here.