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What’s the answer? National Minimum Wage increase

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This week Nicholas Snowden at Clarkslegal LLP and Stephanie Wootton, employment law expert at Browne Jacobson present their ideas on how to manage the impending hike in the National Minimum Wage.



The question:
This is the first time I have been ‘in charge’ of HR when the NMW has increased and I am looking for some advice. Other than ensuring all employees are paid at least the NMW is there anything else I have to do?

Our starting pay rate is not much more than the new NMW so I am going to propose an increase – does anyone have any advice on this – our HQ in US will have to approve this and we’ve not been making much £ lately, however if we pay close to the NMW we will struggle to recruit quality staff.

Many thanks.

Human Resources

The answers:
Nicholas Snowden, Senior Solicitor at Clarkslegal LLP
piggy bank
From a legal perspective, as long as you have a fair pay structure under which everyone receives at least the national minimum wage, your business will not have a problem.

From a business perspective, I imagine that HQ will want your views on the advantages and disadvantages of increasing pay and your recommendation on what, if any, action should be taken.

You raise the recruitment of quality staff as being one concern. Whether or not the lack of a pay increase will have a negative impact on recruitment depends on the market you operate in. This is what you need to assess in your report to HQ. In compiling your report, if you can include benchmarking information about what your competitors are paying, this should be of significant use in the decision-making process.

Nicholas Snowden can be contacted at [email protected]

Stephanie Wootton, employment law expert, Browne Jacobson.
Contract being signed
The National Minimum Wage (NMW) increases each year on 1st October. The adult rate, for workers aged 22 and over, will increase from £4.85 per hour to £5.05 per hour this year. Workers aged 18-21 will be entitled to an increased hourly rate of £4.25.

An increase in an employees’ rate of pay technically constitutes a variation to the employment contract. Strictly speaking, a contract cannot be changed without both parties’ agreement, so in legal terms, you should actually seek consent from the staff affected!

In reality, however, there is no need for employees to signify their consent in writing – as it is not common practice for employees bring a breach of contract claim for getting an increase in pay! But you should provide written confirmation of the increased rate, and keep a copy on file.

Ensure that you clarify the date from which the new rate is to apply – i.e. the start of the first pay period after 1st October – unless you have agreed that it will apply from 1 October.

Increasing pay beyond the NMW rate may assist in recruiting quality staff and will ensure that you comply with the annual increase in minimum rates. However, your discussions with your HQ on this issue are more of a strategic issue than one requiring legal input.

For more advice on the NMW and how it applies to your staff, call the Department of Trade and Industry’s NMW Helpline on 0845 600678. Stephanie can be contacted at: [email protected]

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HRZone highly recommends that any answers are taken as a starting point for guidance only.

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