22 Apr What is the National Living Wage and how will it affect your business?
Back in July 2015 the Chancellor, George Osborne announced a compulsory National Living Wage which all business owners in the UK hospitality trade should be aware of.
Is there not already a National Living Wage?
There is, but this is only used by employers on a voluntary basis. The current system is £6.50 per hour and applies to everyone aged 21 and over. Currently 25% of all workers in the UK hospitality industry are paid at or below the National Minimum Wage as it is currently known.
The new system, which comes into place in April 2016 will ensure everyone aged 25 and over receives £7.20 an hour rising to £9 by 2020.
How will this affect my business?
The impact of the new National Living Wage is dependent upon the size of your business and how many employees you have. It is estimated 60,000 jobs could come under threat because of the introduction of the new living wage criteria however some measures have been put into place to ease the burden of the new living wage on vulnerable businesses. For example:
• The Chancellor announced a 50% increase to the national insurance employment allow-ance from £2000 to £3000, which will help small business owners to reduce their wage bill and could offset the increased living wage cost.
• The reduction to corporation tax could also help to ease the cost of wage increases but this depends on the number of low paid employees that a company has and its level of profita-bility.
An excellent resource for employers is The Living Wage Foundation who have been campaigning for low paid workers since 2001. To date they have 1,600 accredited Living Wage employers and to find out how other business owners have benefitted by voluntarily introducing a living wage ahead of the government’s proposed changes click here