The National Living Wage : – Is Your Business Ready?

money2Most of us, (given the option,) would happily accept an increase in pay for the job we do!  

Well, on 1st April 2016, the new “National Living Wage” came into effect in Northern Ireland, making the dream of a pay increase for some workers a reality.

The implementation of the National Minimum Wage (Amendment) Regulations 2016 means that all workers aged 25 and over are now legally entitled to at least £7.20 per hour pay. 

Whilst this is great news for workers over 25, businesses now need to be prepared for how this change will impact on them. 
Here is some important information for you on the National Living Wage:-

What is the National Living Wage?

The National Living Wage is different to the “Living Wage” which is a voluntary hourly rate set at £8.25 which employers can choose to pay.  It also differs from the “National Minimum Wage” which technically remains in place for workers under 25.  The new “National Living Wage” is essentially a compulsory top-up for workers aged 25 and over.

As things stand, the National Minimum Wage rates are as follows:-

  • £6.70 per hour for those aged 21 and over
  • £5.30 per hour for those aged 18-20
  • £3.87 per hour for under 18’s
  • £3.30 per hour for apprentices.

In effect, it is only those workers in the top band, who are over 25 and currently earn £6.70 per hour who will be affected by this  new regulation.  These workers will now be entitled to the top-up of 50p per hour.

What impact will this have for businesses?

Concerns were raised that the new Regulations would be detrimental for businesses in Belfast in that it could have an impact on profits, the use of overtime, bonuses, recruitment and potentially consumer prices but only time will tell.

No doubt employees who now benefit from the increase will certainly be pleased with its introduction. Hopefully a positive effect will be increased productivity and job satisfaction in the workplace.

What happens if businesses don’t pay the “National Living Wage”?

An employee could make a number of claims to the Industrial Tribunal for failure of his/her employer to pay the National Living Wage including a claim for unlawful deduction of wages or a detriment.

Not only that, if an employee is dismissed for a reason related to the National Living Wage they will be able to make a claim for unfair dismissal even if they have less than one year’s service.

Finally, if that wasn’t enough to ensure compliance, an employer can face penalties being imposed by HMRC including a requirement to pay any arrears of pay owed to an underpaid employee and a penalty of up to 200% of the arrears owed. Bear in mind there is also the potential for businesses to be named and shamed if held to be in breach of the Regulations.

If you require any further information in relation to the NATIONAL LIVING WAGE or any other EMPLOYMENT RELATED ISSUE please do not hesitate to contact us here at Life Law NI or email mgavin@fhanna.co.uk

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