21 Feb The National Living wage and your business.
The Governments National Living Wage (NLW) comes in to effect from 1st April 2016. Currently the adult minimum wage is £6.70 this will increase to £7.20 for those over 25.
Although the Office of Budget Responsibility (OBR) estimates that 60,000 jobs will be lost because of this increase, they have estimated that 1.1 million jobs will be created as a result of the 2015 budget overall. Corporation tax was cut by 2% to 18% in order to offset the predicted one percent impact on corporate profits, and the employment allowance was increased by 50% to £3,000.
What will the minimum wage mean for you and you staff?
If EA Assist processes your payroll for you, our system will inform us who is entitled to the wage increase and calculate the correct pay for that employee. We will notify you when we send over your payroll information that the new ‘Living Wage’ has come in to effect. This may mean an increase in your wages bill if you employ staff aged over 25 who are currently paid minimum wage.
We will also make sure you take advantage of the new Employment Allowance ensuring you make use of the £3,000 benefit.
Practically, the increase makes little difference to your payroll function, other than the increase in wage bill providing you pay the correct amount. Employers who fail to pay workers the NLW will face penalties of up to 200% of arrears and disqualification of being a company director for 15 years.
Our payroll service will ensure you are compliant with all statutory regulations making sure you avoid penalties. We will also make sure that you take advantage of any government initiatives such as the Employment Allowance scheme.
The National Living wage is yet another factor that small businesses must take in to account. Planning ahead will help to minimise the impact of the NLW and other government initiatives such as work place pensions which will increase your staffing and business costs.