Professionals warn of emerging trends following launch of the National Living Wage
Professionals from some of the UK’s leading independent law and accountancy firms have commented on new figures, which highlight some of the negative aspects of the National Living Wage (NLW).
The NLW came into force on 1 April and sees those over the age of 25 receiving £7.20 an hour, a rate which is set to increase to £9 an hour by 2020 under government policy.
Since its introduction, a number of leading businesses have announced revisions to employee benefits and overtime pay, including Tesco, Eat and Waitrose.
Alongside this, new research from jobs website CV-Library suggests that the NLW has affected average monthly UK salary, which has declined since its introduction.
Crowdsourced data on the site shows that the average UK salary decreased by 3.4% to £32,899 in April, compared to £34,055 in March.
Mark Saunders, partner at London-based accountancy practice Wilder Coe LLP, said:
“I am not at all surprised to learn that average wages are falling and that Benefits are being cut in the wake of the increase in Minimum Wages.
“The additional costs of the Workplace Pensions must also be having effects on businesses bottom lines. We can only expect this to continue in the future as business owners re-assess their budgets.
“The economy is still not recovering strongly enough from the last recession and the further uncertainties surrounding Brexit only go to exacerbate the situation.
“The other thing to be concerned about is that increased wages often lead to higher rates of inflation so perhaps it will be the introduction of higher Living/Minimum wages that finally see us experiencing higher interest rates.”
Meanwhile, Donna Martin, associate solicitor at leading London law firm Mackrell Turner Garrett, added:
“The impact the National Living Wage (NLW) is having has been widely reported since its introduction just over a month ago, with large companies and smaller employers being affected alike.
“Employers will need to act with caution when removing or reducing staff perks – if a benefit or a rate of pay has been in place consistently for a significant period of time, it may well become an implied term of the contract of employment through custom and practice. If this is the case then employers will need to consult with their staff and obtain their consent to such changes in order to avoid claims for breach of contract.”
