It’s now three years since the Government introduced the National Living Wage.
The government’s rationale at the time was that it wanted to move from a low wage, high tax, high welfare society to a higher wage, lower tax, lower welfare society.
Despite fears that the new rules would place unmanageable cost pressures on SMEs, most businesses seem to be coping well under the new regime, which is testament to the resilience of British entrepreneurship. Additional costs will always cause problems for smaller businesses, but there are also obvious benefits to paying the National Living Wage, not least in terms of your reputation as an employer.
Now, the National Living Wage has gone up again. So, how will this affect your business?
Here are the key points to remember:
– Full-time workers receiving National Living Wage will be more than £2,750 better off a year compared to 2015, when the rate was first announced
– The National Living Wage went up on 1 April by the highest rate since it was first introduced, increasing by almost 5% to £8.21 per hour
– 2.1 million workers set to benefit from minimum wage increases, including almost 800,000 retail and hospitality workers
The Government says the UK’s minimum wage is currently growing faster than other countries with similar or higher minimum wage, such as Belgium, France and Germany.
The government aims to end low pay and later this year will announce the independent Low Pay Commission’s remit after 2020. At Spring Statement, ministers also announced that the world-leading academic Professor Arindrajit Dube will lead a review of the impact of minimum wages internationally.
Wage increases follow hot on the heels of the biggest increase to workers’ rights in a generation, launched in 2018, and are a vital aspect of the Government’s modern Industrial Strategy.
As part of this, from 6 April all workers, including casual and zero-hour workers, had the right to receive a payslip and the maximum employment tribunal fines for employers will quadruple from £5,000 to £20,000.
While we appreciate the need to reward staff for their hard work, these extra costs will hit businesses hard
What we are calling for is the Government to find ways – such as reforming the failing business rates system – to help businesses with these extra costs, while at the same time letting responsible businesses reward their staff with the National Living Wage.
If you’re concerned about what the rises in the National Living Wage mean for your business, please do get in touch.