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December 11, 2015

Businesses urged to get ready for the Living Wage

Businesses urged to get ready for the Living WageThe Government is advising businesses to prepare for the National Living Wage well in advance of its introduction in 2016.

The new National Living Wage (NLW) becomes law on 1 April 2016. Firms are being advised to take some simple steps to prepare for the legislative changes. All employees over the age of 25 will be eligible for the new rate of £7.20 per hour. Businesses need to update their payroll systems and communicate the changes to staff.

A survey conducted by Censuswide for the Department for Business, Innovation and Skills (BIS) in November 2015 polled 1,000 UK employers about the Living Wage. It found that, despite the fact that 63% of employers said they know which of their staff should be receiving the new Living Wage, most of those polled had yet to prepare for the change.

The findings reveal that 45% of employers had updated their payroll systems in anticipation of the new rate; 39% had communicated the upcoming changes to staff; and 29% had looked online for more information about National Living Wage entitlement.

Recent research by HR body the CIPD found employers plan to improve efficiency and productivity to help meet the cost increases.

Mark Beatson, CIPD chief economist, said: "The National Living Wage was a bombshell for most employers when it was announced in July. It comes into force next April, which does not give employers a lot of time to prepare, hence we found 26% of employers in September saying it was still too soon to say how they would manage the cost implications."

However, the findings of the BIS survey show that most employers are positive about the introduction of the National Living Wage:

  • 93% of all bosses agreed the National Living Wage was a good idea;
  • 88% said it would make staff more productive;
  • 83% believed it would make staff more loyal towards their employer;
  • 86% said it would boost staff morale.

Business minister Nick Boles said the Living Wage "will provide a direct boost to over two-and-a-half million workers in the UK - rewarding and providing security for working people. I am urging businesses to get ready now to pay the new £7.20 rate from 1 April 2016."

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