NLW and age discrimination
Labour & European Law Review Weekly Issue 474 15 June 2016
The House of Commons has produced a useful briefing pack on the introduction of the National Living Wage (NLW) in April this year (set at £7.20 per hour) for workers over 25 and its potential impact on age discrimination.
In particular, the research flags up the fear that over- 25s might be discriminated against in favour of younger, cheaper workers. According to the briefing, this concern was noted in the Low Pay Commission’s spring 2016 report when it stated that the introduction of the NLW alongside a new rate of £6.70 for 21-24 year olds created “perverse incentives for employers to substitute younger workers for older ones”.
Given that section 39 of the Equality Act 2010 makes clear that direct and indirect age discrimination are unlawful unless the discrimination can be justified as a “proportionate means of achieving a legitimate aim”, the research points out that it is likely that recruiting under-25s just to avoid paying the NLW would constitute direct age discrimination.
Indeed, the report cites advice by the Equality and Human Rights Commission in its Equality Act 2010, Employment Code of Practice which states that “an employer solely aiming to reduce costs cannot expect to satisfy the test [of a legitimate aim]”. In other words, if the employer’s sole aim is economic, they are likely to fall foul of the legislation. Likewise, employers may open themselves to age discrimination claims if they hire workers under 25 just to avoid the additional costs of hiring workers entitled to the NLW.
The report also sets out a number of recent parliamentary questions that have been asked by MPs about both the minimum wage and the living wage.
The NLW is the new name for the main adult rate of the national minimum wage. It is not tied to the cost of living and is distinct from the Living Wage, currently set at £8.25 per hour outside London and £9.40 per hour in London.
Gerard Airey of Thompsons Solicitors commented “the debate pack provides an interesting insight into the difficulties of ensuring young workers are given opportunities to work and ensuring those above 25 are not disadvantaged simply to avoid paying a higher minimum wage. This is something to be kept under consideration, but from a legal point of view I suspect claims are more likely to arise in relation to small employers, who may choose someone under 25 for reason of cost. If a union member believes this may be the reason they are not appointed to a role they should consult their union to seek further advice as soon as possible after the decision not to appoint them.”
To read the report, go to: http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CDP-2016-0116#fullreport