With just a month left before the new National Living Wage is introduced, Leeds based accountants Thomas Coombs are encouraging employers to get the correct payroll processes in place.
From 1 April 2016 employees over the age of 25 who are currently earning the minimum wage rate of £6.70 per hour will see a 50p increase in their pay, bringing it to £7.20 per hour.
The average full-time worker in this pay bracket, working 35 hours a week, will see their pay packets rise by more than £900 a year.
This rate looks set to increase further over the next four years, eventually reaching £9 per hour by 2020.
This significant increase in workers’ pay is likely to have a substantial impact on business’s wage costs and will is also likely to place an additional burden on their payroll systems.
Christopher Darwin, Partner at Thomas Coombs, said: “Paying your employees the correct wage is extremely important.
“Failing to pay the correct wage will not only create animosity amongst your workforce, but could also land you with a hefty fine and lead you to be named and shamed by the Department for Business, Innovation and Skills, which could do significant reputational damage to your firm.
“It is inevitable that this new wage increase will have a significant effect on your business’s profits in the months and years to come, so now is the time to assess where savings can be made within your company.”
Christopher Darwin added that certain industries such as the care sector, retail and hospitability, which employ a large number of low paid staff, would be affected most by the changes and would need to consider what actions need to be taken to ensure their ongoing success.
If you would like to know more about Thomas Coombs’s range of payroll and accountancy services, please Christopher Darwin.