FROM 1 April 2016 the national living wage of £7.20 per hour replaced the national minimum wage of £6.70 per hour.
The new rate generally applies to all employees aged 25 or more.
The Government’s aim is to develop the UK economy away from low productivity and earnings to one with higher productivity, skills and earnings.
It is too early to see how this has impacted on businesses in Northamptonshire, but it certainly represents a challenge for employers, particularly those employing significant numbers of lower paid employees.
Increasing prices is not always an option, particularly
FROM 1 April 2016 the national living wage of £7.20 per hour replaced the national minimum wage of £6.70 per hour.
The new rate generally applies to all employees aged 25 or more.
The Government’s aim is to develop the UK economy away from low productivity and earnings to one with higher productivity, skills and earnings.
It is too early to see how this has impacted on businesses in Northamptonshire, but it certainly represents a challenge for employers, particularly those employing significant numbers of lower paid employees.
Increasing prices is not always an option, particularly for businesses that export or for those operating in competitive domestic businesses such as groceries and catering. The increased pay rate might be met by reducing profit, but this can only be a short term solution.
The national living wage will be £9 from 2020, so employers have to look at the opportunity this change presents. Increasing productivity will be achieved through a number of routes. Sadly, some jobs will be lost through increased use of technology. Here businesses may find access to finance for investment more difficult so they need to put together a clear and achievable business plan with the help of an accountant.
Other businesses will review their employees’ skills and consider if training can benefit the business and the employee. Well trained employees tend to be more motivated and more able to motivate others, thus pushing up productivity. Levels of absenteeism are lower when the work force is motivated and understand the business goals.
The training needs of older employees should be reviewed but it is hoped that more businesses will take on modern apprentices, who follow a structured training plan and develop a good attitude to continuous learning and improvement.
National living wage comes at the same time as many employers are facing additional costs from the auto enrolment into pension schemes and perhaps more regulation from other regulators. Those businesses that will continue to succeed are those that view changes as an opportunity to develop their staff and so develop the business. This will take time, energy and strong leadership.
But the first stage is to check that your pay structure ensures that national living wage is being paid, including during the statutory annual holiday of 28 days for full time employees. The financial penalty for not paying at the right rates is significant. So if you have not already done so, every employer should check their pay rates.
For details contact the firm, which has offices in Cheyne Walk, Northampton and Rugby on 01604 630745 or visit the website at www.jrwatson.co.uk