I’ve been cycling round recently and have started to spot the occasional advert at bus shelters advertising the introduction of the national living wage which is kicking in from the 1st of April this year. If you haven’t noticed these signs it might be to check what you are paying your staff to ensure you are compliant with these changes.
What’s Changing?
From the 1st of April the national minimum wage for employees over the age of 25 is increasing by 50p to £7.20p per hour. This is coinciding with the Government’s new vision of a higher wage, lower welfare and lower tax society.
To ensure that you are abiding by the new law we suggest you review your work force now so that you are fully aware of whether you need to increase any staff’s earnings.
This can increase a member of staff’s earning by up to £900 per year.
We would also suggest that you analyse the total cost of the new minimum wage rises to your business. These will have an impact on your profitability levels so you should include the new figures in your budgets, cash flow forecasts and business analysis.
Plan for the long term
This wages increase will be the first of many as the Government plans to increase the national living wage to £9 per hour by 2020.
So make sure that you include these increased amounts in any business forecasting you do and build it into any strategies.
Its really important to ensure that your business remains profitable. Failure to maintain profits will eventually lead to the doors on your business closing for good. This is one reasons why many businesses try and keep the overall staff cost as low as possible in order to maintain profits.
However, staff are essential to your business and recruiting the best staff can help to grow your business significantly and increase your profit margins.
One way to ensure you recruit good people is to pay the living wage.
The living wage is a voluntary scheme where employers sign up to pay a minimum of £8.25 per hour and £9.40 per hour in London.
The scheme has all ready found benefits including a 25% reduction in absenteeism and a positive impact on recruitment and staff retention.
So the benefits of this scheme may in fact outweigh the additional costs. As you need to currently review your pay structure from next month anyway, could now be the time to move to the living wage?