Tue 30 / 08 / 16
The difference between the National Minimum Wage, the National Living Wage and the Living Wage - and who is eligible?
Fiona Martin, Head of Employment Law at Martin Searle Solicitors advises on:-
The difference between the National Minimum Wage, the National Living Wage and the Living Wage - and who is eligible?
Martin Searle Solicitors were keen to support the Brighton and Hove Chamber’s Living Wage Campaign and our firm signed up as a Living Wage Employer in December 2014.
The Living Wage (LW) was initiated by the Living Wage Foundation and is intended for all employees and workers who are 18 or above. This is currently set at £8.25 per hour, but in London, where the cost of living is higher, the rate is £9.40 per hour. These rates are reviewed every November.
The LW is particularly important in Brighton and Hove where the cost of living is very high. An employee, 25 years or over, employed by a LW employer, receives £2047.50 more than someone who is paid the National Minimum Wage (NMW).
Steps were taken by the Government in 1999 to stamp out the economic exploitation of workers by introducing the NMW. This set minimum hourly rates of pay based on the age of the UK worker or employee. Rates currently start at £3.40 for apprentices under 19, rising to £6.70 for workers and employees aged 21-24.
Enforcement is carried out by HM Revenue and Customs who can take employers to court for not paying the NMW. Although enforcement is absolutely vital to ensure compliance, Brighton and Hove Albion Football Club recently fell foul of these provisions when they were recently ‘named and shamed’ by the HMRC. This was unfortunate because the club believed they were offering a young person the opportunity to volunteer. This meant they were exempt from paying the NMW. This example shows the need for all employers to be aware of the legal distinctions between volunteers and employees, particularly when paying expenses. Free advice can be obtained from Gov.uk to help employers avoid inadvertently breaching the NMW provisions.
On 1 April 2016, the Government introduced the National Living Wage (NLW), but only for workers aged 25 or over. This increased the hourly minimum wage rate for 25’s and over from £6.70 to the NLW rate of £7.20 per hour. Although this rate will be updated annually, it is considerably lower than the LW and does not include younger workers and employees. But this is a step in the right direction as NLW is compulsory.
Our employment law team advises and trains local employers on best practice recruitment practice. We emphasise how important it is for employers to build their organisation’s reputation as a fair and equitable employer.
Employers who publically commit to paying their employees the LW positively differentiate themselves from their competitors. This not only increases their chance of attracting the very best talent, but also of retaining valuable employees and workers.
We would urge all employers who can afford to, or who may already be paying the LW or above, to join this important campaign. You can find out more by contacting Brighton and Hove Chamber of Commerce at campaigns@businessinbrighton.org.uk, visiting http://www.livingwagebrighton.co.uk/ or by seeking information and accreditation from the Living Wage Foundation.
Other free resources include:
https://www.gov.uk/national-minimum-wage/what-is-the-minimum-wage
Our employment law team are available to assist with any queries you may have if you are an employee and concerned that the NMW or NLW is not being honoured.
We also assist employers who require further advice about whether new vacancies are suitable for interns, volunteers, workers or employees.
Please contact us on 01273 609911 or by emailing info@ms-solicitors.co.uk.
You might also like:
If you want to contribute to the Chamber blog, contact us on hannah@brightonchamber.co.uk