Implementing The National Living Wage

Implementing The National Living WageThe time is almost upon us. In April the new National Living Wage will become law and be mandatory for all businesses. Any employee over the age of 25 or apprentice past their first year will be legally entitled to at least £7.30 per hour in pay. While this is fantastic news for employees everywhere, the new changes have payroll departments wringing their hands in fear. The night of the living wage is coming, is your business prepared?

Let Everyone Know What’s Going On

The first thing you need to consider is the sheer amount of time and energy this seemingly small change is going to take. Across the country payroll departments will be increasing the pay of around 2.7 million – that’s going to take some serious man hours. While HMRC say it only takes four simple steps to ensure you’re ready and compliant, it takes time to identify those in your business that are eligible for the new wage, make the changes necessary and inform staff of the change.

You should also be mindful of the responses you might receive from your staff. Wage changes are a sensitive subject and while you might think that a rise will only garner happy faces, you might be surprised with the outcomes. Those within the ranks that carry any additional responsibilities might be upset if the change in basic pay takes away their incentives, so it’s important to bear this in mind.

Get Your Documentation In Order

While you’re gearing up for the change, start gathering the information you will need ahead of time. A clear, structured and organised record of all staff, their details and their histories will help you to evaluate eligibility easily. Performing a full wages audit will also help you to calculate and make any wage changes much faster. But this is just the beginning (though it might seem like the end). You will need to review all of your contracts and other written agreements. If hourly rates have been written anywhere in the training materials or employee handbooks, these will all need to be updates. As the government has committed to raising the National Living Wage every year, this might be a good time to review whether you want to include such details in your materials in the future. If you’re currently hiring you may need to update your adverts.

The Importance Of Compliance

We all know that when it comes to government legislation, compliance is as tricky as it is vital. That’s why outsourced payroll providers like eBOS are increasingly being instructed to help manage the legislative changes for customers. Failure to comply with the new National Living Wage will result in your business being liable for 200% of the amount owed unless the arrears are paid within 14 days. This fine can go up to a maximum of £20,000 per worker. Employers who fail to pay their employees the National Minimum Wage will also be banned from being a company director for up to 15 years. It’s therefore never been more important for your business to be completely payroll compliant.

We have yet to see the kind of knock on effect the National Living Wage will have on business as a whole, but so far opinions have been varied. Some believe this rate heralds the end of days for retail businesses, while others think this will not make much difference in practical terms.

Many businesses may look to outsource certain departments in a bid to control costs, and that might even include your payroll department. For help and advice on enforcing the National Living Wage in your business, get in touch with the team here at eBOS for your free consultation.