UK Labor: Does the National Minimum Wage Constitute a Case of Age Discrimination?

Over the years it has been questioned whether the National Minimum Wage (“NMW”) constitutes a case of age discrimination.

To answer this question we have examined the history of the NMW and the reasons justifying the difference in rates of pay under the NMW.

Where did the National Minimum Wage come from?

The Labour Party, under the leadership of Neil Kinnock in 1986 supported a policy of creating a NMW. The idea was to regulate the minimum an employee could earn across all industries so as to ensure a minimum quality of life, fairness to workers and to prevent employers from exploiting its workforce.

Tony Blair as part of Labour’s 1997 election campaign picked up this gauntlet and used it as one of the party’s flagship policies.

Following Labours successful election into government, the National Minimum Wage Act 1998 (“the Act”) received royal assent and took effect from 1 April 1999.

A National Living Wage has since been introduced for workers aged 25 or over.

At what rate is the NMW paid?

The NMW is paid on a scale depending on the worker’s age. Each year the scale is adjusted to reflect inflation and has risen slowly annually since 1999.

The current rates (as of April 2018) for the NMW are set out below: 

Who is entitled to the NMW?

The NMW is to be paid by all employers regardless of their size.

The NMW is available to a wide range of workers to include employees, agency staff, casual workers, company directors, apprentices, home workers, family workers, piece workers and students.

So what is the problem?

At first instance, the NMW appears to be a worthy Act which guarantees income for workers and removes the possibility of exploitation by employers who in most cases have the bargaining position when agreeing contracts. However, many people argue that the Act results in a case of direct discrimination, i.e. an 18-year-old is paid less than a 21-year-old and is therefore discriminated against simply because of his/her age.

It must also be remembered that age is a protected characteristic under the Equality Act 2010 and discriminating against a person because of their age is unlawful.

So does the NMW constitute a case of age discrimination?

The Equality Act states the following:

(2) If the protected characteristic is age, A does not discriminate against B if A can show A’s treatment of B to be a proportionate means of achieving a legitimate aim.

The question, therefore, is whether the varying the rates within the Act have been set to achieve a legitimate aim and that the different rates are a proportionate means of achieving a legitimate aim.

The Low Pay Commission (“LPC”) advises the government on the NMW and concludes that varying of the NMW rate does achieve a legitimate aim on the following grounds:

• Unemployment for 21 – 24-year-olds not in full-time education is twice as high as for 25 – 30 year-olds.  
• The reality that the average wages of young workers are lower than older workers due to less experience, less qualifications, and higher training costs. 
• The rates reflect a more subtle consideration in that education plays a critical role in enabling higher earnings and job security.  The NMW has been designed to address exploitation in work, without encouraging young people to enter the labor market full-time who might otherwise stay at school or college.
• Living expenses of younger people tend to be lower than that of older people. 

Therefore the varying rates of pay for different age groups are deemed to be a proportionate means of achieving a legitimate aim as they make employing younger people more attractive to employers, assist in decreasing unemployment levels for younger people, encourage younger people to stay in education, are reflective of the fact that older workers generally have a higher education and greater experience and because younger people tend to have lower living costs. 

So is the problem misconstrued?

According to the LPC, yes, but there are many people who argue that the different levels of pay for different aged workers are not justifiable and should be challenged. 

Many of these complaints come from younger workers directly affected by the lower pay they receive, but there are also some online think tank groups, journalists and youth representative groups who challenge the legitimate aim of the NMW rates.  Of note, Members of the Norwich Youth Advisory Board are set to discuss the NMW rates with Norwich South MP, Clive Lewis, ahead of the second reading of the Employment Guarantee Bill in July 2018.

Whilst it is important for discussions such as this to take place it appears unlikely that the NMW would be held to constitute a case of age discrimination, though the point has never been challenged in the tribunal.

By Peter Olszewski, Associate Solicitor,  Boyes Turner, UK, a Transatlantic Law International affiliated firm.  

For further information or for any assistance regarding UK employment law, please contact  Barry Stanton at uklabor@transatlanticlaw.com. 

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