James Townsend
Posted on 15 Feb 2016

National Living Wage – too far, or not far enough for agricultural workers

Until 1 October 2013, Agricultural Workers in England were entitled to be paid the National Minimum Wage (NMW) or, if higher, minimum rates of pay, set from time to time by the Agricultural Wages Board (AWB).

On 1 October 2013 the AWB in England was abolished.

As matters presently stand, all adult Agricultural Workers over the age of 21 working in England are entitled to be paid NMW at the rate of £6.70 per hour.  Those aged between 18 and 20 are entitled to be paid NMW at the rate of £5.30 per hour.

Separate rules apply to Agricultural Workers in Wales.

In his July 2015 budget, Mr Osborne announced that with effect from April 2016, a premium will be added on to NMW for all workers aged 25 and over.

This premium termed the ‘National Living Wage’ (NLW), will give an effective pay rise of 50 pence per hour to every UK adult worker aged 25 and over who receives NMW and will take that worker’s rate of pay to £7.20 per hour.

Workers aged 21-24 will continue to receive NMW and will not be entitled to the NLW premium.

NLW is expected to rise year on year so that by 2020, it is expected that NLW will stand at £9.00 an hour for all adult workers aged 25 and over.

Following his budget announcement, commentators have suggested that Mr Osborne is seeking to make political capital out of successes made by the independent ‘Living Wage Foundation’, which at the time of Mr Osborne’s announcement advocated employers pay all their staff and contractors an hourly ‘Living Wage’ (LW) of £9.15 per hour in London and £7.85 per hour in the rest of the UK (now raised to £9.40 and £8.25 per hour respectively).

Any employer that fails to keep appropriate pay records, fails to pay its workers NMW, dismisses and / or treats workers to their detriment for matters associated with NMW, can face criminal prosecution, public naming and shaming, as well as possible claims from aggrieved workers in the County Court or Employment Tribunals.

Right or wrong, the introduction of NLW in April 2016 will take the government’s stated policy objectives one step closer: “The government wants to move from a low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society” - Department for Business Innovation & Skills, Policy Paper, National Living Wage, 24 August 2015.

This stated policy will have particular impact upon those employers in the Agricultural sector who are already working to tight margins. 

For more information please contact James Townsend, Partner in the Employment Team on james.townsend@michelmores.com or 020 7659 7341