The Living Wage

Are Employers Obliged to Pay Staff the Living Wage?

Boris Johnson, as the Mayor of London, has been a very vocal promoter of the Living Wage.  But what is it and how does it affect employers?

To be clear, the only statutory minimum level of pay that employers are obliged to give their staff is the National Minimum Wage (NMW).  The NMW rates are set out in the table below, with the standard adult rate currently set at £6.50 per hour.

The Living Wage is a level of pay somewhat higher than the NMW.  Campaigners say it is the lowest amount people need to earn in order to avoid living in poverty.  The current rate is £7.85 per hour (£9.15 in London).  It is reviewed annually by an independent body, and set by the Living Wage Foundation.  Unlike the NMW, there are no variations to the rate dependent on the employee's age.

Employers in traditionally low paid industries may choose to pay the Living Wage for a number of reasons, including to improve recruitment and retention, to engender good staff morale, and to promote themselves as socially responsible employers.

You can read more about the Living Wage at the Living Wage Foundation's website. 

Employment Law and the Election

Employment Tribunal Fees

One of the most dramatic changes to the employment law environment under the outgoing parliament, is the introduction of employment tribunal fees in 2013. Claimants now have to pay £250 in order to bring most types of claim to a tribunal, and a further £950 in order for their claim to proceed to a hearing.  This has resulted in a massive drop in claims, as many individuals who have just lost their job are unable to to pay these fees. 

Whilst this has been good news for employers, it does seem as if access to justice may have been curtailed for a number of genuine claimants.

It will be interesting, therefore, to consider what may happen to the employment tribunal fees under a new government.  Below, I have set out in brief the tack taken by the main political parties in their manifestos:

• Conservative

As they were the main drivers behind the introduction of fees, it is perhaps not surprising that they do not make any proposal to change the current system.

• Labour

"The Conservatives have introduced fees of up to £1,200 for employment tribunal claimants, creating a significant barrier to workplace justice. We will abolish the Government's employment tribunal fee system as part of wider reforms to make sure that affordability is not a barrier to workers having proper access to justice, employers get a quicker resolution, and the costs to the tax payer do not rise."

They do not mention, however, whether they will replace the system with a new one - perhaps by reducing the fees - or whether they will be scrapped altogether.

• Liberal Democrats

"We will...Improve the enforcement of employment rights, reviewing Employment Tribunal fees to ensure they are not a barrier." 

So any potential change will be dependent on the outcome of a "review".

• Green Party

"We will...reduce Employment Tribunal fees so that tribunals are accessible to workers."

A clear commitment to a reduction but no indication of by how much.

• UKIP

They make no mention of employment tribunal fees.