The National Living Wage (NLW) was introduced on 1st April 2016 and already there are concerns being raised as to how this is being implemented.
On 18th April 2016, Members of Parliament criticised employers who are reportedly removing benefits, such as enhanced overtime rates and free lunches, in order to pay for the increase in pay for employees over 25. This was followed by a warning from George Osborne that companies should think about their reputation before taking such steps.
It is not entirely clear from the reports we have seen as to what Mr Osborne is proposing as a deterrent for employers who do take such steps, if anything. Will it be a naming and shaming campaign similar to that for not paying the National Minimum Wage (NMW), or something stronger?
There is already some provision for taking action against an employer who dismisses an employee or treats them detrimentally because they have or will become eligible to receive the NLW. Any dismissal would be automatically unfair. Removing benefits from an employee because they are entitled to the NLW will be an unlawful detriment. There is also the possibility that they have been treated less favourably because of their age, resulting in a claim for age discrimination.
However, if benefits are removed from all employees, not just those eligible for NLW, it may make it difficult for an employee to argue they have been singled out on either age or NLW grounds.
That doesn’t mean that employers have free reign to make any changes they want. Most benefits will be contractual in nature, so agreement with affected employees will be needed to change them, or if that is not possible a full and reasonable consultation process will have to be undertaken.
The Low Pay Commission (LPC), an independent body that advises the government on the NMW is consulting on a number of aspects related to the NLW and NMW, including the levels at which they are set and enforcement. The consultation closes on 29th July 2016. Details can be found here.