Today sees the Government's implementation of the recommendations of the Low Pay Commission (LPC) and raised the National Minimum Wage from £6.31 per hour to £6.50 for those aged 21 and over.
The New National Minimum Wage
Thanks to the recommendations of the Low Pay Commission (LPC) there is a new, higher National Minimum Wage. Those over the age of 21 years old should see a 19p increase in their hourly wage, increasing the amount from £6.31 to £6.50.
Other pay brackets will also increase. The new wages are as follows:
• Apprentices (under 19 or in first year of apprenticeship) - £2.73
• Employees aged 16-17 - £3.79
• Employees aged 18-20 - £5.13
The minimum wage was introduced in 1999, and the LPC have been in charge of its rates ever since. The average annual increase they have recommended each year is 19p per hour, which would result in £370 more each year, per full time employee.
Pennies add up and this small increase could make a huge difference for those who are the lowest paid in the country. Questions are now being raised about implementing a National Living Wage too.
The Effect on Business
£7.65 per hour is the figure the Living Wage Association believe is required to provide the minimum acceptable standard of living for individuals on minimum wage. This is a huge jump of an additional £1.15 per hour, which if implemented, could have an immensely detrimental effect on businesses.
A higher wage would mean lower profit margins, costs which would undoubtedly be passed onto the customer through higher prices, or even, the letting go of staff due to not being able to afford the same employee numbers.
When the LPC make their decisions to change the minimum wage they take into account the economic conditions of the country. And despite most business owners believing fair pay is essential, many argue that these hikes in wages should not be brought in during times of economic struggle, or when an increase may consequently effect the business’ success.
Failure to Raise Pay
By law a business must adhere to the National Minimum Wage figures, if not, then they will not only have some disgruntled employees, but there could be legal repercussions. A failure to pay the correct wage can lead to civil action and a criminal prosecution that will name and shame the company for all to see.
Since March 2014, the financial penalties for not adhering to the figures set, have also increased, from 50% to 100% of the total underpayments. The maximum penalty has also risen, growing from £5,000 to £20,000, an amount that could cripple some small businesses.
In short, as a business owner you will have to pay your staff more than you used to. But, watch this space to see if the National Living Wage is implemented, that will have more of a dramatic effect!
(Image: Chris Isherwood under CC BY-SA 2.0)
