The national minimum wage, and the living wage, have been important components of ensuring that staff receive reasonable compensation for the work that they do. The national minimum wage first came into force in April 1999 with the National Minimum Wage Act of 1998. The national living wage was introduced in 2016, in response to calls for businesses to enable employees to earn enough to help them meet the actual cost of living.
However, the minimum wage could be leading to companies inadvertently introducing age discrimination when they come to employ staff. Our focus in this month’s article is on understanding the issue and highlighting the things to look out for to ensure you are not discriminating unintentionally. If you need a refresher on the current minimum and national living wages for 2018-2019, take a look at our recent article for all the details.
What is the issue?
The minimum wage was introduced to enable younger people entering the workforce – typically those under 25 years of age – to gain experience and skills. However, it is noteworthy that those under 25 are not entitled to the national living wage. Workers who are 25 years old and younger can only earn the minimum wage – at the very least – until they reach their 25th birthday. After this they will be able to earn a living wage, which is also an obligatory minimum in the same way that the minimum wage is.
This has led to many organisations employing staff who are under the age of 25 and who will cost the business less in terms of wages. In this way, they are engaging in age discrimination – whether deliberately or not. It also means that there are younger staff working alongside older colleagues with similar responsibilities but on a significantly lower wage. This is not only discriminatory, but ultimately businesses could be losing out as it takes time for new staff to be trained and become effective in their job. If a high staff turnover means that this process has to be repeated regularly, their customers will eventually feel the effects and may end up taking their business elsewhere.
How is this being addressed?
In July of this year, a private member’s bill was introduced in Parliament aimed at extending the national living wage to workers aged 18 to 24 as well. However, with Parliament breaking up for the summer recess, MPs have not had enough time to debate and vote on the bill. It is not scheduled to be discussed again until the end of November, delaying its potential introduction even further.
What can you do?
The government has named and shamed those organisations which underpay their workers. You can ensure you are not one of them by carefully considering the job description and the skills and experience required for the job. If employing someone older than 25 will meet those criteria, then in the long run it will also benefit your business. Why? Because you are employing someone who has previous experience and knows their way around customers and service, and who will help you build strong relationships with your clients. They are also less likely to move on quickly to an organisation which does pay a better wage.
For advice and guidance on minimum and living wages and how they may affect your business our team at
Bells Inc. Hamilton Stewart is here for you. Call or email us on 020 8763 1711 and at and we will help you out.
