New National Living Wage - Make Sure You're Ready...
Unless you’ve been living under a rock for the past six months, you’ll no doubt be more than aware that the new regulations regarding National Living Wage will soon be rolled out. From 1st April 2016, workers in the UK aged over 25 earning the current minimum wage of £6.70 per hour will be entitled to a 50p increase to £7.20 p.h.
It’s great news for many employees, with many individuals expected to take home an extra £900 a year. As an employer though, you need to make sure that you’re ready and that you’re going to be fully compliant with the new legislation by the time that April comes round – that’s why I’m mentioning this in February!
Now of course, in an ideal world, you’d already have your plan of action entirely mapped out. If you haven’t though, it’s important that you don’t panic. We’re here to help, and if you get started right away, we can ensure that you get to where you need to be before the deadline.
Let’s get started by looking at the tasks that you need to work through.
- Consider the changes that must be made to your full suite of HR policies and procedures
It goes without saying that you may have to change the amount that you pay your staff each month. Unfortunately, though, it’s not quite this simple. To make sure you’re compliant, you’re going to have to look at every aspect of your people practices e.g.
- You might need to update any recruitment materials with the new hourly rate.
- You might have to make changes to your employee handbook and any induction content that you share with new recruits.
Take a step back, and think how the changes could have a knock-on impact, and what you’ll have to get covered.
- Work with your payroll provider
If you outsource your payroll to another organisation, you need to have a conversation with them ASAP to make sure that there are no administrative glitches once the new legislation comes into force. The good news here is that they’ll be working with business owners just like you every single day right now, and making sure that they’re supporting them through the changes. Ask plenty of questions, and take all the advice that you can get. Working in collaboration here will ensure you do what’s necessary.
- Address any issues that might arise with pay scales and employee relations
In some circumstances, raising the hourly rate of your lowest paid employees can mean that they’re now earning the same as their supervisors. Obviously, this could cause unrest. It’s likely that those with more responsibilities will take issue with the fact that they appear to be no longer receiving an incentive for their hard work.
What you do about this will depend on numerous factors, including the resources that you have available. You’re probably going to have to make some difficult decisions, and it’s vital that you take a clear direction that’s well communicated with all staff.
As you can see, it’s not strictly a matter of giving your employees that extra 50p for every hour that they work. There may be other important factors to consider, and there’s a very tight deadline that you need to adhere to.
If you need any further help or guidance then please just get in touch to discuss it.
PLEASE NOTE: The NLW will operate in the same way as the NMW so it is effectively just a new premium fifth tier rate of the NMW. However, to ensure all employers comply, the financial penalty in the event of NMW/NLW breach will rise from 100% to 200% of the underpayment on 1st April 2016, applied to EACH worker who has been paid incorrectly. Innocent mistakes or ignorance will be no defence and a fine will still be applied so please take action and conduct a review ASAP.
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