Don’t botch living wage response, says expert

A Lancashire employment lawyer has warned businesses not to fall foul of employment legislation if the national living wage forces them into making redundancies.

A number of high profile employers have already said the national living wage of £7.20 per hour, being introduced in April 2016, will result in higher wage bills and could force them to scale back recruitment plans and lay off staff.

However, Roger Spence, head of employment law at Harrison Drury, believes it could lead to some businesses breaching employment laws if they don’t follow the correct redundancy consultation procedures.

Roger said: “Many businesses are worried about the impact the living wage is going to have on their recruitment policies and are either already scaling back on job creation, or looking at ways they can mitigate the impact, which may include having to consider redundancies.

“Employers need to be able to demonstrate that they have considered all the alternatives and redundancies should be a last resort. As always, all the correct consultation procedures must be followed, or it could get even more costly for employers as they fight employment claims for unfair dismissal.”

According to research conducted in September 2015 by the CIPD and the Resolution Foundation think-tank, more than half (54 per cent) of UK employers say the national living wage will have an effect on their pay bill.

Four out of five (79 per cent) retail employers, 77 per cent of those in hospitality and 68 per cent in the healthcare sector said they will be affected by the national living wage.

Asked how they would respond to the National Living wage, 30 per cent of employers said they intend to manage the higher wage costs by improving productivity. Taking lower profits or absorbing costs was the next most popular response (22 per cent), followed by reducing overtime and bonuses (16 per cent), raising prices (15 per cent) and reducing the number of employees through redundancies or slower recruitment (15 per cent).