The UK National Minimum Wage rose to £8.21 per hour for every employee over the age of 25 years. Find out below what you need to make sure your business is fully prepared for the extra cost.
The National Living Wage is the hourly rate applied to low-paid workers entitled to by law in the United Kingdom, and is a campaign launched in April 2016 to raise the level of the National Minimum Wage. These pay rises are reviewed annually by the Government on the first Monday of November, and benefit more than two million workers.
These rates depend on the workers’ age and whether they’re an apprentice.
|Apprentice under 19||£3.70 per hour||£3.90 per hour|
|Under 18||£4.20 per hour||£4.35 per hour|
|18 to 20||£5.90 per hour||£6.15 per hour|
|21 to 24||£7.38 per hour||£7.70 per hour|
|25+||£7.83 per hour||£8.21 per hour|
Although the minimum wage for under-25s increased in April, the new rates are still below the real living wages, based on the measurement of the Living Wage Foundation, which points out this is “the only rate based on what people need to live”. That is to say, the cost of living, the minimum wage is not calculated according to what employees and their families need to live, according to the Living Wage Foundation.
These annual increases range from 3.7% for under-18's to 5.7% for over 25's. That’s significantly above the latest UK inflation rate, which stands at 2.7% according to the Office for National Statistics. The Government pointed out that this rise will equate to £600 extra per year added to the pay packet of every full-time employee over 25 years of age. The long-term plan is to push the National Living Wage up to £9 per hour by 2020. This means small business need to apply bigger increases in minimum pay levels over the next two years. In the last weeks forecasts by the Office for Budget Responsibility estimate the figure will reach £8.75 per hour by 2020.
These changes for pay increases might affect up to 2.6 million small businesses registered as PAYE, this maybe a good time to review a company’s cash flow statement. Besides, employers should implement every rise as soon as possible and within 6 months, as a legal requirement. As a small business owner, failing to do this may result in fines of up to 200% of the back pay and a 15-year ban from running a company.
However tight your business budget, make sure you have sufficient safeguards and you’re buying the right insurance for your business.
If you’re interested in finding out more about commercial insurance or getting a quote then please call Intasure 0345 111 0680 to find out more.
*The opinions and views expressed in the above articles are those of the author only and are for guidance purposes only. The authors disclaim any liability for reliance upon those opinions and would encourage readers to rely upon more than one source before making a decision based on the information - Correct at 07/11/2018.
Published by: intasure
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