Minimum Wage Increases and What This Means For Companies
Over the last twelve months, numerous announcements about upcoming tax and minimum wage changes have been made. The latter however is a piece of welcome news for millions of individuals as the National Living Wage rate for those over 23 years of age will rise to £10.42 from April 2023. This a much-needed boost especially during the cost-of-living crisis, but what does this uplift mean for companies and how can they prepare?
As with any business that will see amendments to its bottom line, there needs to be some planning so that finance teams can cope with the increase in minimum wage payments - whether that’s for contractors, agencies, umbrellas, or the workforce as a whole.
As this enforcement is a legal requirement, prosecution and a financial penalty could be the result of failing to comply, regardless of the size of the company. Companies must keep records on file if a time comes when they’ll need to show evidence that they’re abiding by the law in civil court or during a dispute at a tribunal.
If you’re wondering how, it’s possible to incorporate the new increase, there are a number of ways to factor in this financial shift and ensure demands are met. This could be reducing overall business expenses, providing more working-from-home opportunities to lower energy costs in an office, or increasing your own prices to customers and clients.
The good news is that from the perspective of an employer, this rise in Minimum Wage will have notable benefits for employees. Increased pay will mean more engagement and productivity, loyalty with staff retention, and better outcomes overall as employees will be better off financially compared to this time last year.
The upcoming increase to the National Living Wage means that the annual salary will be over £1,600 more than the current figure workers on minimum wage will be paid. This rise isn’t just the case for those over 23, but also for some apprentices and younger workers. Expected to benefit around two million people the 92 pence bonus on top of the current minimum payment of £9.50 per hour will take effect in the Spring. For 21-22-year-olds, the payment goes from £9.18 an hour to £10.18, £6.83 to £7.49 for 18-20-year-olds, and £4.81 to £5.28 for 16-17-year-olds.
Whilst it’s certainly a helping hand during the current financial situation, it’s still lower than the price of inflation which has seen household essentials such as milk and bread become costly amenities. As an employer, it’s important to think about your extra offerings and advantages for employers to help with retention and overall well-being. Whether that’s providing complimentary hot drinks, snacks, lunches, sanitary products, or schemes such as the Cycling to Work Scheme to reduce how much is being spent on fuel. The important thing is to get ahead of the changes in April to benefit you and the workforce for the future.
At Omega, we support companies and candidates alike to find their perfect fit. If you’re looking to expand your team or take that step on the career ladder, we can help. Specialising in aviation, engineering, automotive, electronics, defence, scientific, oil and gas, logistics and manufacturing, check out our website for more details.
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