HR · 2 March 2016

Government warns businesses to prepare for the National Living Wage

National Living Wage
The government has urged employers to communicate wage increases to their workforce

With less than a month to go until it comes into force, the government has urged business owners to prepare for the National Living Wage, and has published new guidance on how to achieve this.

The four-step plan urges company leaders to check who within their organisation will be eligible, if they haven’t done so already, and to inform staff over the age of 25 paid the minimum wage, who will see a 50p per hour increase in their rate of pay.

The change is set to impact more than a million UK workers, with those employed full-time on the minimum wage set to earn £900 more a year.

A study published by the British Retail Consortium(BRC) in February warned that the increased cost to employers could lead to the loss of up to 900,000 staff in the industry. “Areas that are already economically fragile are likely to see the greatest impact of store closures and some of the people affected by changing roles will be those who may find it hardest to transition into new jobs that are created,” the authors of the report wrote.

The BRC document also predicted that up to up to 74,000 of the UK’s 270,000 shops could shut by 2025, but pointed to an increase in quality for those remaining. BRC Chief Executive, Helen Dickinson, said: ”Individual retailers will find their own paths to 2020 and beyond but from an industry perspective, we hope to see technology and competition resulting in better experiences for the customer and better jobs for those working in retail.

However, many small firms have welcomed the policy. Bradley Cummings, the co-founder of Welsh microbrewery Tiny Rebel, has been paying staff the new rate since January. “As a relatively young company, we take our responsibility to our staff very seriously,” he said.

“Making sure we were paying the National Living Wage to our staff was important to us, so we took the time to make sure we could afford it, and figure out how to make it work for us – and our staff.”

Additional recent research carried out by advice platform XpertHR highlighted that many HR professionals cannot diffierentiate between the National Living Wage due to come into force in April and the higher “Living Wage”, calculated by the charity Living Wage foundation, to which employers can sign up on a voluntary basis.

To see how the Living Wage could benefit your micro business, read this.

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ABOUT THE EXPERT

Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics – as well as running a tutoring company.

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