August 15, 2018

The National Minimum Wage, Apprenticeships, and Age-Based Discrimination

The National Minimum Wage (NMW) celebrates its 20-year anniversary in April 2019, but age and the NMW has been an issue in the media for a very different reason.

The Odeon cinema chain, Card Factory and ten sports clubs were among more than 200 employers named-and-shamed by the Government for failing to pay the national minimum wage, coughing up £3.4m in back pay and fines.

Underpaying apprentices was one of the top reasons businesses failed to pay the legal requirement to their staff but, to be fair to businesses, paying the national minimum wage to apprentices is not as straight forward as you may assume – their age and stage of development within the apprenticeship both factor into the rate they should receive.

National Minimum Wage for apprentices

AgeFirst Year of
Apprenticeship
Subsequent Year(s)
of Apprenticeship
Under 19£3.70£3.70
19 or over£3.70NMW

As you can see, the rate for an apprentice is £3.70 in the first year, but for those aged 19 or over it can more than double in subsequent years depending on their age:

Year25 and over21 to 2418 to 20Under 18Apprentice
April 2018£7.83£7.38£5.90£4.20£3.70

Get it wrong for any sustained period – and/or for a large pool of employees – and it’s easy to see how a substantial underpayment can happen.

Age is protected under equality legislation, so is different rates of NMW for different ages legal?

To date the rates of pay for NMW have been justified on the basis of:

  • ensuring a minimum quality of life
  • providing fairness to workers
  • preventing employers exploiting their workforce
  • (for example, by posting a job advert on social media which could be argued would attract a younger applicant, potentially saving the employer £6,984.12 a year based on them employing a 17-year-old over “an adult”

Age is a protected characteristic under the Equality Act 2010, and under this Act discriminating against a person because of their age is unlawful.

So you can see the argument an 18-year-old could bring:

“I am 18 years old and I am paid less than my colleague for doing the same work in the same job, just because they are 25 years old.”

It’s an argument that could find its way into an informal grievance and, with the removal of Tribunal fees, many employers – particularly those with large numbers of younger workers – harbour fears they could face a domino effect if just one young staff member chose to go down this route.

It certainly seems on first glance seems like this could easily be costly, both in terms of time & resource and impact your bottom-line.

But the truth is that the varying rates of pay are proffered by the Low Pay Commission (LPC), a body set up to advise the Government on the appropriate rates for the National Living wage and National Minimum Wage.

And the LPC conclude that these rates of pay achieve what’s called a Legitimate Aim (LA)

on the following grounds:

  • the unemployment rate for 21-24 year olds who are not in F/T education is twice as high as for 25-30 year olds
  • the reality that the average wages of younger workers are lower than older workers due to less work experience, less qualifications and higher training costs
  • the rates reflect a more subtle consideration that education plays a critical role in enabling higher earnings and job security
  • living expenses of younger people tend to be lower than those of an older worker

To date, a case challenging the legality of the NMW has not been brought to an Employment Tribunal. Many unions, for example USDAW, now oppose the varying rates and want to see the National Living Wage paid to all employees aged 18 and over.

But for now, so as long as you are paying your staff the correct rate all remains well.

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About the author

Revinder Basra

HR Consultant