An increase in the National Living and Minimum Wage and rising workplace pension contributions could create the perfect storm for small businesses in April.
Small businesses owners across the UK will need to prepare themselves for the changes ahead, which will see the National Living Wage (NLW), rise by 4.9 per cent.
Announced during the Chancellor’s Autumn Budget in 2018, the increase in the UK’s statutory wages will see companies pay £8.21 to those on the NLW – up from £7.83.
Meanwhile, those paid the National Minimum Wage (NMW) aged 21 to 24 will see their pay boosted to £7.70 an hour, which is 39p more than they currently receive.
Apprentices will also see their wages rise by 20p to £3.90 and 18 to 20 years old will receive £6.15 an hour from the same date.
This rise in wages will be timed alongside the next rise in contributions under workplace pension arrangements, which will see eligible employees receive an additional one per cent from their employer, while their own contributions increase to five per cent.
Despite many employees welcoming the change, for employers this means that they will not only be paying employees more, but that the additional pay will also be affected by the increase in workplace pension contributions, which means that they will effectively be hit with higher payroll bills twice in a single month.
It is essential that companies explore how they could reduce costs and build up surpluses to ensure that they didn’t find themselves in distress this year.
If you are unsure of your responsibilities in regards to minimum wage legislation or would like assistance with your payroll functions to ensure they remain compliant with the law, please contact us today.