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.
About the author: Jeremy Harvey is partner and head of employment and HR at Coodes Solicitors.