Will employers try to favour under 25’s
In April 2016, the government introduced the NLW which was the single greatest increase to the UK’s minimum wage ever, with a rise of 50p per hour to those of 25 and over.
Research from Resolution Foundation revealed that over 25% of the UK work force would benefit from the new NLW.
Many critics have claimed that the government provided very little time (just 12 months) to adjust to the new legislation coming into force. It is estimated that the national wage bill will increase by about £1.5bn due to the introduction of the new legislation and critics of the government process are dismayed that employers are being provided with very little information of how to balance out the costs apart from a small change made to business and corporation tax rates.
Campaigners however have heralded the introduction of the NLW as an important step towards reducing inequality in our society – however they are concerned that businesses may look to recoup these additional costs by navigating the new NLW by reducing overtime hours, withdrawing benefits and pro-actively hiring people that are under 25.
There are several employers in the UK that have provided the new NLW minimum pay rate of £7.20 across their entire workforce, regardless of them being under 25 however there has also been a number of large firms that have notably altered there structure including Tesco, that have apparently slashed overtime pay and John Lewis, whom has removed Sunday rates and overtime.
Caroline Wood of Small business HR Services firm, HR Heroes says “We want to ensure our clients are keeping within the law so no business should be making hiring decisions based on age. It’s clear discrimination. From our experience, regardless of the reason, hiring based on age just simply won’t stand up in court”.