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Concerns employers will cut corners to avoid National Living Wage

The National Living Wage, announced by the Government in the July budget, promises to top up the National Minimum Wage rate by a 50p premium for those over the age of 24 from April 2016.

The Resolution Foundation has estimated that a quarter of the UK workforce stands to benefit from the change, which it said would see the national wage bill rise by £1.5 billion.

Following further increases in the premium that are expected to take the rate to more than £9.00 per hour by 2020, the bill will be £4.5 billion, it estimated.

The rises are likely to 'challenge' certain sectors more than others, it said, with hospitality, retail and care being named in particular.

'It's not yet clear how employers will respond but, while some may opt to reduce hours or new hires, past experience tells us that most absorb the pressures via some combination of small increases in prices, a dip in profits and productivity gains,' Conor D'Arcy, policy analyst at the Resolution Foundation, said to The Guardian.

Discrimination issues

Concerns have been raised by legal experts that some employers may be tempted to hire workers under the age of 25 to avoid the wage rises.

But they should 'be wary of doing so if the sole motivation is economic', Naeema Choudry of law firm Eversheds said.

'UK discrimination laws require that employers do not discriminate on the grounds of age when it comes to recruitment, whether disadvantaging younger or older workers,' she said.

'It is important, therefore, that employers continue to focus on the needs of the organisation and can demonstrate recruitment selection based upon the best person for a particular role, not their age or cost.

'Someone dismissed because they qualify for the higher minimum wage rate will be able to claim compensation for unfair dismissal and, potentially, age discrimination.'

Acas publications and services

Acas has information on the National Minimum Wage and National Living Wage, and can help you understand what you need to do to pay your employees correctly.

There's also Help for small firms on Handling pay and wages, one of Acas' suite of step-by-step guides, with everything you need to know to keep up with your obligations.

The guide pdf icon Asking and responding to questions of discrimination in the workplace [164kb] aims to help you establish the facts, resolve concerns and avoid disputes if employees feel they have been treated unfavourably at work because of a protected characteristic.

Acas experts can visit your organisation and help you with issues related to discrimination, as well as your equality and diversity policy. See Equality and diversity: how Acas can help for more details.

Practical training is also available on Discrimination, Equality, diversity and the Equality Act 2010, Contracts and terms and conditions, and for new employers, Employing People - A Practical Introduction.

For free, impartial advice and guidance visit Acas Helpline Online.

Visit the Acas Training Courses, Workshops and Projects area for more information.


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