Tuesday, 1 March 2016

Paying £7.20 an hour: only one month to go

Only one month to go before employers must start paying the increased minimum wage of £7.20 an hour to employees age 25 and over.  The National Living Wage comes into force on 1st April 2016. 

For employees age 25+ that you’re currently paying the National Minimum Wage of £6.70 an hour, it’s only an additional 50p an hour.  However if they work full time, the government estimates it will mean a £900 a year pay rise – and £900 per person a year additional cost for you.

The government says it intends to enforce the new National Living Wage as robustly as it has the National Minimum Wage.  This will mean repayment of arrears to the employees, penalties and naming & shaming – so there will be reputational damage.

Employers underpaying the National Minimum Wage now face a maximum £20,000 penalty per person. A selection of the companies – many of them SMEs – that have already been named & shamed for failing to pay the National Minimum Wage include:

·         Abbey House Hotel, Barrow-in-Furness, failed to pay £13,468 to 13 employees.
·         Richard Lewis Communications plc, Southampton, failed to pay £8,751 to 3 employees.
·         Kiddy Academy Hunts Cross Ltd, Liverpool, failed to pay £8,297 to 2 employees.
·         Oldham Premier Plumbing Supplies Ltd, Oldham failed to pay £6,270 to 1 employee.
·         Matt Jenkins Dressage, Chipping Norton, failed to pay £6,184 to 1 employee.
·         Merritime Nursery, Gosport, failed to pay £5,344 to 1 employee.
·         JG’s Hair & Beauty Ltd, Northallerton, failed to pay £3,427 to 3 employees.
·         Ocean Dental Implant & Aesthetic Clinic, Manchester, failed to pay £2,819 to 2 employees.
·         Woodside Nursery School, Waterlooville, failed to pay £2,799 to 1 employee.
·         Petersfield Joinery Ltd, Petersfield, failed to pay £2,720 to 1 employee.
·         Helping Hands Day Nursery Ltd, Tilbury failed to pay £2,629 to 1 employee.
·         Centra Link Ltd, Calne, failed to pay £1,483 to 1 employee.

The National Minimum Wage is £6.70 an hour and this falls to £5.30 an hour for the development rate for those aged 18-20, £3.87 an hour for the young workers aged 16-17, and to £3.30 an hour as the apprentice rate.

This is what you will need to do:

·         Check age and pay data for your employees to identify whether any will be age 25+ in April and are currently paid below £7.20 an hour.

·         If you will need to increase some individuals’ hourly rate, budget for the increase from April 2016.

·         Consider across-the-board cost of living increases for other low paid employees in order to maintain pay differentials.

Contact The Human Resource on 07884 475303 for help and advice with paying The National Living Wage from 1st April, e.g. calculating additional costs, planning to offset them and the policy implications, plus communicating the change to your employees. 

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