As of April 1st, all employers in the UK will be required to pay their staff aged 25 or over what is more commonly known as the national living wage, which adds a new tier to the minimum wage. It will mean staff being paid an hourly rate of £7.20, but while this will be of huge benefit to employees, what does it mean for companies, and what do they need to know as the change comes into effect?
There’s never been a better, or more vital, time for companies to be looking at their budgets moving forward. The increase in the minimum wage will mean additional costs for some companies, and also there could be an added expenditure of pension auto-enrolment. For these reasons, working out what you can afford as a company is important, as is putting the necessary budgets in place.
If the change in wages and auto-enrolment is going to mean your company will lose out financially, iit may be sensible to look at streamlining ther services and providers you currently use to help with this added cost and look at others.
When you’re dealing with the national living wage, it’s important to be sure that you cannot be accused of discriminating against people of a certain age. Because the new wage of £7.20 only applies to people who are aged 25 or over, there’s a temptation for companies to only employ people who are aged 24 or younger. However, this could leave you open to claims of discrimination, and remember this could mean an added expense for your business in terms of management time and costs.
Not everyone will know about the changes that are in force from April 1st, so as an employer your starting point would be to discuss it with all of your staff to make sure everyone is informed. It can help to raise morale among those who are about to start earning the higher wage, while those who aren’t will be able to learn why not, meaning they won’t feel left out, or asking questions affecting staff morale.
Of course, when anything changes in employment law, it’s important to know what can happen if you don’t comply. For any company that does not pay their staff the new national living wage, there are severe penalties in place. Anyone not complying may be potentially liable for a fine of up to a maximum of £20,000, as well as having to pay any affected staff 100 per cent of the wages they have missed out on. With this in mind, it’s important to get it right, and consult an expert if you have any areas of the new regulations you’re unsure about.