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11 September 2015 0 Comments
Posted in Opinion, Private Client

Living Wage policy has major implications for social care

Posted by , Partner

There are growing concerns about significant changes to minimum wage legislation and the impact that this could have on a number of key sectors.

Under plans announced by the Chancellor George Osborne in last month’s Budget, a wage floor of £7.20 an hour will be introduced for over 25s from April next year. This will rise to £9 an hour by 2020.

Many employers, particularly those with a higher proportion of low earners, are unsure about how they will meet the increased staff costs.

Among the industries likely to be most affected by a “National Living Wage” is social care. There are currently 1.4million care workers in the UK and hundreds of thousands of these are paid the statutory minimum wage.

This means that the new laws will place a significant financial burden on companies nationwide.

The UK HomeCare Association has actually gone as far as to write to Mr Osborne, warning that the new rules could trigger a crisis in the homecare market and that some organisations will be forced out of business.

The letter said: “As major providers in the homecare sector, delivering together over 47million hours of homecare care a year, we welcome [the] Government’s commitment to low-paid workers through a new National Living Wage

“However, unless the additional costs are fully funded, there is a serious risk of catastrophic failure to support people who receive state-funded care at home.”

Many in the social care sector have called for assurances from local authorities and the Government that support will be available to address the gap in funding which could arise as a result of the changes.

In response to the concerns, a Downing Street spokesman said: “The overall costs of providing social care will be considered as part of the spending review later this year, and we are working with the care sector to understand how the changes will affect them.”

For advice on the National Living Wage and what the legal implications could be for the social care sector, contact the employment team at Royds today.

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