Is your company prepared for the new national living wage?
With just over two weeks left until the new national living wage comes into effect, accounting firm Milsted Langdon is encouraging employers to get the correct payroll processes in place as soon as possible.
From April 1st employees over the age of 25 earning the minimum wage currently £6.70 per hour will be handed a 50p pay increase, taking the minimum hourly wage to £7.20. The average fulltime employee in this bracket, working 35 hours a week, will see their annual income rise by more than £900.
Chancellor George Osborne has estimated that 2.5 million people will get a pay rise, and an individual fulltime worker can expect a cash increase of more than £5,000 over the next five years.
Additionally, it is expected that by 2020 the national living wage for 25-year-olds will increase to £9 per hour.
However, Milsted Langdon is concerned that some businesses may be caught out by the changes if they are yet to fully incorporate the pay increase into their overall business costs, with a Milsted Langdon spokesperson suggesting that the implementation of the national living wage could have a substantial impact on both the wage costs and the payroll systems of many companies.
If you have concerns over whether your business is fully ready for the changes to the minimum wage, it may be worth contacting an accountant to double check.
Mike Lean, payroll manager at Milsted Langdon, said:
“Paying your employees the correct wage is extremely important. Failing to pay the correct wage will not only create animosity amongst your workforce, but could also land you with a hefty fine and lead you to be named and shamed by the Department for Business, Innovation and Skills, which could do significant reputational damage to your firm.
"It is inevitable that this new wage increase will have a significant effect on your business’s profits in the months and years to come, so now is the time to assess where savings can be made within your company.”