A new blog post by specialist food and drink solicitors, Roythornes, has warned that employers could find themselves in hot water if they use new National Living Wage (NLW) legislation as a reason to make employees redundant.
In the piece, Roythornes associate Maz Dannourah sets out a range of considerations about the new legislation, which came into force on April 1.
And, he warns that giving the new legislation as the reason for redundancies could result in legal challenge.
He wrote: “One point to be clear on, and I have my concerns that this will be taken too lightly by some employers, is that it will unlikely be satisfactory to simply quote the NLW as the reason for dismissing a role as redundant or reducing headcount.
“Cost itself never justifies the decision to dismiss given that redundancies, in their implementation, are not about costs but are entirely about the need for labour.
“Employers would be well advised to consider this when rolling out redundancies which are designed to combat the cost burden of the NLW.”
He added that a number of companies had already been in contact with the firm to ask about what they can do contractually and legally to tackle the increased costs they face.
Maz said that some businesses, due to the flexibility in their prices, may be able to pass on the cost to customers.
However, he warned that others were hamstrung by the terms of their suppliers and the market in which they operate meaning they will have no choice but to absorb the cost.