The National Living Wage (NLW) and National Minimum Wage (NMW) are set to rise substantially from April 2020. This could mean careful planning and thought for employers so Plan now.
You have around three months to decide how to deal with the increases. Obviously, you have to pay them but there are some other things to consider before just accepting that costs will rise by more than 6%. Previous experience is that the rises don’t just have an effect on those employees receiving the minimum wage but there is pressure to maintain differentials and a rise in National Minimum Wage and National Living Wage often means that wages higher up the scale will also increase.
Can my business become more efficient? In other words, is there scope for reducing the number of people I employ, reducing the hours worked or producing more?
Are there times of a day or week when it isn’t worthwhile opening?
Will I be able to pass on the increased costs to my customers without losing business.?
How is it going to affect goods and services I buy? Will my suppliers increase their charges to me?
Will outsourcing be more viable?
Every business is different so the impact will vary. There is likely to be more pressure to push up prices in service industries where wages are either at or just above the minimum. Your local hairdresser, restaurant, coffee shop, pub – or anything retail – will feel more pressure to increase prices.
This may result in the double whammy of sending those businesses over the VAT threshold (which isn’t being increased) meaning they have to increase prices even further just to stand still!
We recommend you start to think about this now and consider your options. Please don’t leave it until April when (if we do your payroll) we have to tell you that your wage bill has increased.
Contact us to discuss your costings and let us help you prepare for the increases – 01509 816150
The National Minimum Wage and National Living Wage increases are as follows:
- Age 25 and above – £8.72 per hour (up 6.2% from £8.21)
- Ages 21 to 24 – £8.20 per hour (up 6.5% from £7.70)
- Ages 18 to 20 – £6.45 per hour (up 4.9% from £6.15)
- For under 18s – £4.55 per hour (from £4.35)
- Apprentice rate – £4.15 per hour (from £3.90)
If you are going to be affected, don’t bury your head in the sand. Talk to us now (01509) 816150) and let’s put a plan together. One of our team will be pleased to help: