The New Living Wage Introduced

Today marks the day that over 100,000 workers in our region will see a significant pay rise as the Minimum Wage becomes the Living Wage. Until today, the legal minimum hourly pay rate has been £6.70. Now, this figure has increased to £7.20 per hour for those over 25 – with the hope that this will reach £9.00 by 2020.

The introduction of the Living Wage has been in the pipeline for some time so there’s been plenty of time to get used to the idea. However, it’s only now that it kicks in that the full effect will be felt. Some employers have concerns about the effect on their businesses – increasing the annual wage bill by tens of thousands of pounds for some larger employers. Others say they may have to decrease the size of their workforce to compensate for the increase in salaries. There is speculation that in some industries, such as hospitality, leisure and catering, there will be a drive to recruit younger workers as the Living Wage does not currently apply to those under 25, leaving more mature employees on the sidelines (age discriminatory issues aside).  Not everyone is quite so cynical: some have in fact introduced the £7.20 per hour minimum across their workforce for those aged 18 or over. Undoubtedly we will see many businesses increase their prices or services charges to mitigate against higher operating costs.

We’d be interested to hear your thoughts on how the introduction of the Living Wage will affect your business. It may be that you need help with payroll to ensure that you are complying with the legislation, or perhaps you may benefit from discussing your employee structure with us to help you staff your business most efficiently, without falling foul of pay or discriminatory laws. Please feel free to contact us for a confidential discussion.

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