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Living wage checklist: are you following the new rules?

From today, April 1, all employers in the UK must pay staff aged 25 or over the new national living wage of £7.20/hour. Drapers looks at what retailers need to do now it has come into effect to avoid any penalties. 

Esther Smith, employment partner at UK law firm TLT, says:

  • Conduct an audit of your pay structures if you have not already done so, to understand the financial implications of this new law
  • Ensure minimum pay levels are being met to avoid claims from employees and fines, as the penalties for breaching these laws have been doubled
  • Employers may, consciously or unconsciously, look to employ younger people to avoid the higher wage costs. Ensure that, at an operational level, there are no practices in place that could give rise to claims of age discrimination, given the higher wage costs of employing those over 25.
  • Think carefully about any PR implications of operating practices and claims

David Tate, head of insurance firm Marsh’s retail practice, says:

  • Review employment practice procedures: an increasing amount of new employment legislation and any disputes relating to hours, processes, and/or jobs may mean employers have a greater exposure to employment tribunal claims. Compliance with new regulations is an important part of business operations.
  • Keep focused on effective health and safety: the living wage and any associated reduction in hours may make employees more aware of other minimum rights and standards. At the same time, retail employers may have less operating budget to spend on risk-control measures. This could lead to an increasing number of claims for work-related accidents or ill health and the associated costs involved in defending claims and managing reputation.
  • Review liability insurance costs: the living wage may affect how liability premiums are calculated. For employers liability, the exposure is evaluated by considering: historic claims experience; evidence of a positive approach to risk management, and health and safety; maximum accumulation of employees at any one time and any one location; and the size of the risk. The size of risk is normally measured by wage roll – however, wage roll does not directly correlate to employee exposure.



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