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One of the big announcements in the
latest UK Budget was the ‘national
living wage’, which will replace the
existing national minimum wage for
all workers aged over 25 with effect
from next April. All those operating
in the logistics industry need to take
careful note of how it will impact them.
The current minimum wage of £6.50
an hour will be replaced with a new
rate of £7.20 and this is expected to
rise further to more than £9 an hour by
2020.
The concept of a ‘living wage’ already
exists and has been voluntarily
adopted by more than 1000 employers
across the UK who have been given
the ‘living wage employer’ status.
Transport for London, for example is an
accredited living wage employer. This
wage is set at a higher rate and is not
to be confused with the new national
living wage which will be mandatory
and the respective rates of pay will be
set by government.
It is vital that employers across the
transport and logistics sector start
to plan for this change now, as the
national living wage could fuel a
significant jump in payroll costs.
Employers will need to consider
carefully how they implement this
change within their organisation,
including assessing the knock-on effect
it is likely to have in terms of their
existing pay scales, pension costs and
other employee benefit schemes.
There is significant uncertainty around
the impact the new living wage will
have. Certainly, it is anticipated that
it will rise much more than inflation
and employers are losing a significant
element of control over what they pay
some of their staff. They therefore may
have to make difficult organisational
decisions which may result in
Ben Daniel, employment partner at Weightmans LLP,
discusses how the new UK national living wage will impact
the logistics sector.
contractual changes; for example,
reducing or stopping bonus payments
and cutting back on other employee
benefits.
There will be questions around whether
to retain existing pay scales and use a
supplement, or whether to implement
new ones and what knock on impact
this will have on administration and
payroll in the business. There might
also be issues around pay scales if the
new living wage means an employee’s
pay is inflated to a level where they
are being paid as much as their
supervisor. Inevitably this might mean
the employer’s whole pay structure is
overhauled. As a part of this overhaul
it is important that pay adequately
reflects the value of the different
roles - a job evaluation study might be
appropriate.
Some key considerations to
bear inmind are:
■
There is likely to be unpredictability of
payroll costs and subsequent issues
with budgeting and forecasting
■
Employers will have to assess the
day-to-day administration and
payroll implications
■
Employers should also consider
any employee relations issues that
might arise, for example, where
an employee’s wages have been
inflated to a level where they
are being paid as much as their
supervisor
■
Employers should also ensure
that there are pay structures in
place which reflect the value of
jobs within the organisation. They
should therefore consider whether
a job evaluation study might be
appropriate. Such studies have
been an important tool for setting
pay rates among public sector
employers, particularly to ensure
equality between male and female
employees.
Within a heavily Unionised sector, it is
important to anticipate the Union view.
In this context, RMT has previously
campaigned for a living wage, which
they believe should rise to at least
£10 per hour at today’s prices for rail
cleaning staff. Strike action has also
been threatened in the past where
the concept of a living wage has been
refused. The concept of a living wage
also remains very high on the priority
list of UNITE. It is very likely that the
anticipated Union stance will be to use
any mandatory living wage level as
a mechanism to seek to drive up the
levels of pay for all employees. This
will inevitably figure heavily in future
pay talks across the sector. Certainly,
employers across the logistics industry
must evaluate and review existing
business/financial models and start
thinking about how to implement the
living wage.
Living with the new
National Wage
22
Logistics Business Magazine | November 2015
EMPLOYMENT ISSUES