THE 'KEEP MOVING IN 2016' GUIDE

THE NATIONAL LIVING WAGE

FROM THE UK'S LARGEST INDEPENDENT INVOICE FINANCE SPECIALISTS

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THE NATIONAL LIVING WAGE

What is it?

From 1 April 2016, businesses of all sizes are required to pay their employees the new National Living Wage (NLW) of £7.20 per hour.

The introduction of the NLW was announced in the 2015 Summer Budget and is intended to support the Government's vision of a higher wage economy. According to the official figures, 1.8 million workers in the UK aged 25 and over are set to directly benefit form the increase. There are exemptions for those aged under 25 and those completing apprenticeships.

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How will it impact your business?

While the new living wage is good news for employees, it means that SMEs will need to adapt their finances to accommodate higher wages for their workers over the age of 25. Furthermore, the National Living Wage will continue to rise on an annual basis with the Goverment targeting a rise to £9 per hour by 2020.

Find our more at www.livingwage.gov.uk

The following considerations will help you adjust to the new rules and prepare your business for future changes.

KNOW THE IMPACTS

It's important that you know which members of staff are eligible immediately and this means that you'll need to ensure that you have up-to-date and accurate information on employees.

Planning ahead will save more work down the line, so you should review how the changes introduced on 1 April and subsequent changes planned in the years ahead will impact your cashflow. You should also review how this will affect pension contributions for your cashflow. You should also review how this will affect pension contributions for your business as this could also have cashflow implications for your business.

TAKE APPROPRIATE PAYROLL ACTION

The changes came into effect on 1 April and pay should be adjusted with immediate effect. Don't disappoint your staff by telling them they're going to receive a pay rise, only for payroll not to be updated in time. Almost two thirds of SMEs told us they plan to invest in their business in Q2 2016, with a quarter looking to recruit over the months ahead so now is an ideal time to review your cashflow forecasts, particularly if you plan to recruit over the coming months.

COMMUNICATE THE CHANGES EFFECTIVELY

Although the new National Living Wage is mandatory, it's good news for employees so communicate the changes effectively in a way that reflects well on you as an employer. Some businesses have committed to effect the changes for all staff with immediate effect - including for apprentices and those under 25 - and while this may not be possible for every business - for those that can, this is a good opportunity to promote yourself as an employer.