This year the Chancellor, George Osbourne introduced the National Living Wage in his July budget statement. Since 1999 there has been a minimum wage in the UK, but the idea of paying your employees a Living Wage is something campaigners have been fighting for for a number of years. The difference between a minimum Wage and a Living Wage may only be a pound or so, but it can help to raise the lowest paid workers out of subsistence levels of income. The introduction of the National Living Wage will begin in April 2016 and start at £7.20, rising to £9 an hour by 2020, replacing the £6.50 minimum wage and only for workers over the age of 25.
As employers, you want to be able to pay your staff the wage they deserve, but wage bills are high and for smaller businesses especially, increasing the hourly rate can have significant cost implications for the business. To help businesses to meet the increased wage demands, George Osborne has said that Corporation tax will be cut by two per cent to 18 per cent by 2020 and that employers will be able to reduce the amount of National Insurance contributions (NICs) they pay for their employees by 50% up to £3,000, which should go some way towards meeting the costs of the Living Wage increases.
There are many companies already paying the Living Wage across the UK, and the introduction of the new rate in April 2016 will benefit 6 million people on low wages in the UK. There have been studies examining the benefits to businesses that have already implemented the Living Wage, and they have found that more than 80% of these employers believe that the Living Wage has enhanced the quality of the work from their staff, while absenteeism has fallen by approximately 25%. Additionally two thirds of employers reported a positive impact on recruitment and retention within their business, with 70% of employers reporting that the Living Wage had increased consumer awareness of their commitment to being an ethical employer.
Introducing the Living Wage in your business can be problematic and needs a co-ordinated HR approach. Failure to pay the Living Wage to your eligible staff can mean that your business may be reported and investigated by the HMRC. If you are found not to be paying your staff the minimum Living Wage then you could be fined. And from the autumn of 2016, anyone found guilty of not paying the Living Wage to their eligible staff will be considered for disqualification as a company director for 15 years.
If you or your business need help, support and guidance in rolling out the Living Wage in your business, contact Triple Three Solutions today – our expert HR Consultancy Services in Manchester and beyond can help you more effectively manage the mandated changes to your business.
For more information on the Living Wage HR Advice then contact Triple Three Solutions today on 0161 300 1214 and speak to one of our HR Advisors, or visit our website.