National living wage: is your business ready?

The national living wage will be introduced in April, which means that all staff over 25 must be paid a minimum of £7.20 – an increase from the current national minimum wage of £6.70. Coodes’ Employment team looks at some of the considerations for businesses.

“Employers should now be planning for the impact the introduction of the national living wage will have on the economics of their organisations. If your business currently employs people on the national minimum wage, this change will clearly impact on your business.

“One of the main costs to employers will be maintaining differentials between employees. If salaries at the lower end are increased there may be pressure from those on higher salaries with more responsibilities to want more. That is more an HR issue than a legal issue, but is something employers would do well to consider and plan for.

“The introduction of the national living wage is a good opportunity to check that you are complying with all the legislation around how you pay your staff. One area that can cause confusion is whether or not staff should be paid for preparation and tidying up before and after a shift. Sports Direct reportedly came unstuck on this and it was found they were not compliant with the National Minimum Wage legislation. It was reported that their staff were not being paid for the time taken to carry out compulsory checks at the end of each shift. A good rule of thumb is that time taken to get ready for work, changing, handing over, tidying up and so on, all need to be included within contractual hours.

“When the national living wage replaces the current minimum hourly rate, more businesses are at risk of non-compliance and could face substantial penalties for getting it wrong.”

For more information or advice, please contact the Employment team on 0800 328 3282 or info@coodes.co.uk. Alternatively, you can use the contact form.