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National living wage: how to prepare your business

On 1 April 2016 the National Living Wage comes into force for all employees aged 25 and over. Julie Braithwaite, payroll expert at Clayton & Brewill offers some tips on how to prepare.

From April 2016, all workers aged 25 and over will be legally entitled to at least £7.20 per hour. The current national minimum wage is set at £6.70, so this represents an extra fifty pence per hour for eligible employees.

Employers in the healthcare, retail and hospitality sectors are likely to be most affected.

Here are Clayton & Brewill’s four tips to help you prepare for the National Living Wage:

Make sure you know the correct rates of pay and who is eligible

Workers aged 25 or over and not in the first year of an apprenticeship will be legally entitled to at least £7.20 per hour. The Government is committed to increasing this every year, so by 2020 it will be more than £9 per hour.

Have in place a system so that when younger workers turn 25, they are paid at the correct rate.

Understand – and plan for – the impact on your bottom-line

Employers will need to consider how they will accommodate the increase in labour costs, particularly those in labour-intensive sectors such as services and hospitality. It is important to assess the impact across the whole remuneration spectrum as higher basic pay also means higher holiday pay, sick pay, bonuses and pension contributions.

Update your payroll processes in time for 1 April 2016

You’ll need to make sure you’re paying your staff correctly from day one, as we understand that the National Living Wage will be enforced as strongly as the current National Minimum Wage.

Communicate with your staff

Tell any workers as soon as possible if they are going to see changes in their salary.

For advice on budgeting for the new living wage rates or for help with your payroll, please get in touch with Clayton & Brewill. Call us on 0115 950 3044 or click here to email us.

Clayton & Brewill provides audit, tax and advisory services to individuals, owner managed businesses and SMEs across the Midlands, from its network of offices across the region in Nottingham, Long Eaton and Melton Mowbray.