How will the National Living Wage affect my business?

With the new mandatory National Living Wage (NLW) for workers aged 25 and above set to come into force from April 2016, have you prepared for the changes? If your business is affected, it could impact on more areas than purely the cost of paying your staff enough to meet the NLW target. It could also affect how you pay your staff, employee morale, employment law, internal communications and recruitment.

How does the National Living Wage work with the National Minimum Wage?

The adult National Minimum Wage (NMW) rate is currently £6.70 per hour. From 1st April 2016, the National Living Wage will come into effect on top of the NMW, taking the national living wage to £7.20 for those who are 25 and over.

The NMW still applies to those under 25 years old, but without the NLW premium.

How does this affect my business?

With the changes due to affect at least 20% of businesses (November 2015 report from the Resolution Foundation and the CIPD, polling 1,037 employers), you need to consider the implications of the NLW wage now.

There will be extra costs generated by NLW implementation, payroll costs and forecasting, and a considerable impact on your recruitment policies. You may need to:

  • Cut back on discretionary payroll costs, such as bonuses and overtime,
  • Consider not filling vacancies, and reducing how many people you need to hire,
  • Boost productivity and efficiency in your employees.

However, there will also be implications for employment law for those looking at these areas to cope with the extra financial strain of the NLW. If you are looking at reducing your workforce through redundancies, this needs to be considered carefully (look at my previous blog post on Redundancies for more information). Focusing on hiring people under 25 to reduce costs could also lead to age discrimination claims so clear HR/recruitment policies must be in place.

What next for my business?

With the implementation date fast approaching, you need to consider the impact of the National Living Wage now. Will it affect your business? How will you cope with the associated costs? Have you checked and revised your HR Policies and any employment law issues?

To find out more about how the NLW could affect your business, contact me today.

More information about NLW

Redundancies and your business – An overview

It’s always a difficult topic for businesses, but if you need to make redundancies for the good of your company then you must make sure that all procedures are carried out correctly. Do you know enough about making redundancies? What do you need to do? My overview will help you with the basics.

What is redundancy?

Redundancies, if you have to make them as a business, should normally be for the following reasons.

  • You have ceased (or intend to cease) carrying on the business for the purposes of which you employ someone.
  • You have ceased (or intend to cease) to carry on the business in the location you employ someone.
  • You don’t require your employees to carry out work of a particular kind any more.
  • You don’t require your employees to carry out work of a particular kind in a specific location any more.

There are different procedures dependent on how many people will be made redundant. Large-scale (collective) redundancies are where 20 or more employees may lose their jobs within a 90-day period at a single establishment. Where fewer than 20 employees may lose their jobs within a 90-day period at a single establishment, it is seen as a smaller scale redundancy.

What do I need to do?

Present a clear business case. The first thing you need to have to tackle redundancies efficiently and correctly is a clear business case. This will be the core to all communication. Whilst it does not need to give away commercial secrets, it should be able to show trends, figures, savings and the reason why the changes are needed. This will ensure that your staff know exactly why the redundancies are taking place, whether it affects them or not.

Consider which roles will be at risk and why. You must never make reference to individuals by name. Use only posts or job titles when considering which positions may have to be made redundant. If more than one post is at risk and there are similar posts, consider whether ‘pooling’ is necessary and devise selection criteria accordingly.

Consult with those affected. The consultation will need to include

  • Informing ‘at risk’ employees of the situation, what you intend to do about it, and why it is happening.
  • The criteria for the selection process.
  • Ways to avoid/minimise redundancies.
  • Listening to any concerns about the process (or any other relevant matters).
  • Assisting and arranging time off for employees (for example, updating CVs and looking for training).

You need to ensure that relevant invites to meetings are made and formal notes are taken. As with any dismissal, employees have the right to be accompanied if they are to lose their job.

Select which roles will be made redundant. Once the consultation is complete, and all of the criteria has been considered, you must send relevant dismissal paperwork to those affected, and offer an appeal process. You must also calculate redundancy pay [if any is applicable] notice periods or pay, outstanding holiday and any other financial matters, as well as organising appropriate leaving dates.

Will redundancy, or the possibility of redundancies on either a collective or smaller scale, affect your business in 2016? Do you need advice and support on how to approach the situation? Talk to me today to find out more about the procedure, and how you can make it as easy and efficient as possible for you and your employees.

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