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New National Living Wage Increase

What Experts are saying about National Wages, Is Your Business Ready?

New National Living Wage Increase

At the start of April 2016, all employees aged 25 and over will be legally entitled to at least £7.20 per hour as the ‘New National Living Wage Increase’ comes into effect due to the implementation of The National Minimum Wage Regulations 2016.

The government is continuing to raise awareness, therefore businesses need to be prepared for how this adjustment will impact them.  At Abacus we recommend to take these four steps to be ready for the change:

  1. Get ahead of the curve; Check out now who is eligible in your organisation
  2. Take action; align appropriate payroll action
  3. Advise; Educate your staff about their new pay rate
  4. Reflect; To accommodate all current employees, ensure to check that your staff under 25 are earning the right rate of National Minimum Wage

What is the current National Living Wage? 

Pay is one of the most important factors in our working life. It’s a sensitive subject – the way it’s handled can have a big impact on morale and productivity in the workplace.  The challenge for most companies is to set consistent pay levels that give value for money while rewarding workers fairly.

If you’re an employer, you’ll need to make sure you’re paying your staff correctly from April 1st, as the National Living Wage will be enforced as strongly as the current National Minimum Wage.  With this in mind and the new legalisation being put into practice employee’s over 25 will be affected in a positive way by the new regulations.  These workers will be entitled to the top-up of £0.50 an hour from 1st of April and onwards. 

The National Minimum Wage is a minimum payment all employees are entitled to by law.  This of course has many variations depending on an employee’s age.  At present the National Minimum wage rates are £6.70 per hour for those aged 21 and over, £5.30 per hour for those aged 18-20 and £3.87 for under 18’s.

What impacts will this have for business?

Overall a positive impact will be portrayed, having a suspected increase of productivity and job satisfaction as stated by recent GOV.UK survey results.  ‘88% of Northern Ireland employees have identified that they will feel more positive in the workplace.  Alongside 81% having stated that they will also feel more motivated in their job’ due to receiving the 50 pence increase per hour.

Penalties due to failure of compliance

Take note… with the introduction of the National Living Wage the potential penalty for non-payment will be 200% of the amount owed, unless the arrears are paid within 14 days as imposed by HMRC.  The maximum fine for non-payment will be £20,000 per employee. However, employers who fail to pay will be banned from being a company director for up to 15 years.  In our eyes, this is not a risk to be taken, would you like your company to be publically named and shamed if held to be breaching the regulations?

If you require further information in relation to the National Living Wage or any other employment related issue please do not hesitate to contact the Abacus Team on 028 9031 3157 | we will happily accommodate your company by answering any questions.