Our cinemas and the living wage

Author: Mike Tremeer

This article was published in www.screentrademagazine.com / May/June 2016 / screentrade

In April a new minimum rate of pay called the ‘National Living Wage’ was introduced for workers aged 25 and over. As you would expect, this includes qualifying employees that work for cinema operators. Mike Tremeer, a senior associate in the employment team at Fladgate LLP, provides a summary of the existing national minimum wage, and new national living wage, obligations.

The National Minimum Wage (NMW) was first introduced in the UK by the Labour party in 1998. It was a flagship policy of their 1997 election campaign and an attempt to protect workers’ rights amid diminishing trade union membership and power. By early 2016, NMW legislation had evolved to require that a minimum wage was paid to four separate categories of worker: apprentices, workers aged 16 and 17, those aged 18 to 20 and 21 and over. The NMW rates for these categories ranged from £3.30 to £6.70 per hour.

On 1 April 2016, the Conservatives introduced a fifth minimum rate of pay known as the National Living Wage (NLW). This new rate applies to UK workers aged 25 and over and requires that they are paid at least £7.20 per hour. That’s an increase of 50p per hour – or 7.5% – on the NMW rate that previously applied to those same workers. The Department for Business, Innovation & Skills (BIS) claims that over 1 million workers in the UK will be entitled to receive the NLW, and that it will see their annual pay increase by up to £900. Many of those employees are expected to work in the Entertainment and Leisure industries, including cinemas, restaurants and bars.

However, the NLW should not be confused with the Living Wage or the London Living Wage that are promoted by the Living Wage Foundation; that is an entirely voluntary rate of pay that some employers agree to pay their workers. The Living Wage rates are currently £8.25 out of London and £9.40 inside London – so considerably higher than those required by the government through both NMW and NLW legislation.

Recent years have seen a number of cinema operators agree to pay the Living Wage after, often bitter, campaigns by staff and supporters alike. For example, Curzon Cinemas agreed to pay its employees the Living Wage in 2014 following a well-publicised staff campaign that attracted support from such directorial heavyweights as Mike Leigh and Ken Loach. The Picturehouse Ritzy Cinema in Brixton, South London, followed suit shortly after, before apparently seeking to recoup the additional cost by making 25% of roles redundant. That proposal was quickly reversed in the face of a further staff and public outcry.

Many employers warn that the introduction of the NLW will create a two tier workforce, whereby those aged 25 and over are paid more for performing the same job and carrying out the same duties as those aged under 25. As well as the disharmony that this could create among staff, it will also create an additional administrative burden for businesses, managers and HR departments.

Repercussions for businesses that fail to pay the NLW or NMW include financial penalties, fines, a requirement to settle arrears owed to workers, and criminal sanctions against individual directors who consented to, or approved, any breaches. In addition, since October 2013, BIS has operated a practice of ‘naming and shaming’ employers who have failed to comply with their NMW obligations. Large employers in the retail and entertainment industries, including Monsoon Accessorize, French Connection, Subway and the Spirit Pub Company, have already found themselves attracting unwanted publicity as a result.

With feelings currently running high among cinema staff and trade unions, it should be expected that companies failing to pay the new NLW rates are likely to find themselves facing similar sanctions. Employers are advised to take steps to address this now ITAL, including by completing an audit of the wages paid to staff to ensure they comply with the relevant rates.

Mike Tremeer, Senior Associate, Fladgate LLP (mtremeer@fladgate.com)

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