In just under three months, if you aren’t already, you will have to pay employees aged 25 and above the new National Living Wage of £7.20 per hour. Have you given thought as to how you will manage your higher wage costs?
As an employer it is more important than ever that you know which rate applies to each worker in your company, as not only must you pay them at least the rate to which they are entitled but the financial penalty for you as an employer, should you fail to do so, is increasing from 100% to 200% of any underpayment due. It’s a good idea to familiarise yourself with the four levels of National Minimum Wage there currently are (which are usually updated in October each year), and plan ahead for the introduction of the National Living Wage, which adds another mandatory level from 01 April 2016.
Increasingly we are hearing of cases whereby employers are unsure of how to apply rate changes either when rates and/or legislation changes, or an employee’s entitlement advances a level due to their age. It’s important on these occasions to understand the pay reference period you pay your workers for, for example monthly, and any earnings they will have due from this period. As an employer you may be surprised to learn that you may still comply with the legislation even if not all earnings, for example commission, are paid during the pay reference period.
Knowing the correct rate to pay your workers is of course just one element of planning ahead for the changes. Whilst some employers will absorb the higher wage bill others, from the feedback we’ve had so far, are concerned about how to manage the additional cost and any potential implications. We recommend that employers start to think practically now:
We at Willis Consulting and Employment Services can work in partnership with you to help you understand your obligations, consider the consequences for your business, develop ways to manage the impact and deliver management training. We can also help you undertake salary reviews and benchmarking exercises, and work with you to devise strategies to minimise the impact for your business now and over the next few years.
With the National Living Wage coming into effect on 01 April 2016 now is the time to seek advice to help you plan ahead. Call us today on 02890 329042 or email email@example.com and a member of the Willis Consulting team will be happy to help.