There is just a month left before the new National Living Wage is introduced.
From 1 April 2016 employees over the age of 25 who are currently earning the minimum wage rate of £6.70 per hour will see a 50p increase in their pay, bringing it to £7.20 per hour.
The average full-time worker in this pay bracket, working 35 hours a week, will see their pay packets rise by more than £900 a year.
This rate looks set to increase further over the next four years, eventually reaching £9 per hour by 2020.
This significant increase in workers’ pay is likely to have a substantial impact on business’s wage costs and is also likely to place an additional burden on their payroll systems.
Paying employees the correct wage is extremely important as failing to pay the correct wage will not only create animosity amongst the workforce, but could also land the business with a hefty fine and lead to the business being named and shamed by the Department for Business, Innovation and Skills, which could do significant reputational damage to the firm.
It is inevitable that this new wage increase will have a significant effect on business’ profits in the months and years to come, so now is the time to assess where savings can be made within the company.
Certain industries such as the care sector, retail and hospitability, which employ a large number of low paid staff, will be affected most by the changes and will need to consider what actions need to be taken to ensure their ongoing success.
If you would like to know more about our range of payroll and accountancy services, please contact Chris Davies at firstname.lastname@example.org or 01635 555 666 or check out our website at https://www.ross-brooke.co.uk/what-we-do/payroll-paye-autoenrolment/