Business

The rising cost of paying our staff

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Malachy McLernon

QUESTION: I run a local business and I have a small but loyal workforce. I am aware that the National Living Wage is due to go up in April – could you please tell me by how much?

ANSWER: The National Minimum Wage and National Living Wage rise from April 2022, affecting around 2.5 million UK workers, according to the Department for Business, Energy and Industrial Strategy.

It was confirmed by Rushi Sunak in the Budget last October that the National Living Wage will increase to £9.50 from April 1 – which equates to an extra £1,000 a year for a full-time worker.

Mr Sunak said at the time: “This is a government that is on the side of working people. This wage boost ensures we're making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament.”

The new rates from April 2022 are:

• National Living Wage (23 years old and over) - up 6.6 per cent from £8.91 to £9.50

• National Minimum Wage (21-22 years old) - up 9.8 per cent from £8.36 to £9.18

• National Minimum Wage (18-20 years old) - up 4.1 per cent from £6.56 to £6.83

• National Minimum Wage (16-17 years old) - up 4.1 per cent from £4.62 to £4.81

• National Minimum Wage (apprentice rate) - up 11.9 per cent from £4.30 to £4.81

• Accommodation Offset - up 4.1 per cent from £8.36 to £8.70

The National Minimum Wage (NMW) is the minimum pay per hour most workers are entitled to by law. The rate will depend on a worker's age or if they are an apprentice.

The Government's National Living Wage (NLW) was introduced in April 2016 for all working people aged 23 and over.

There are a number of people who are not entitled to the NMW/NLW:

• Self-employed people.

• Volunteers or voluntary workers.

• Company directors.

• Family members, or people who live in the family home of the employer who undertake household tasks.

All other workers including home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.

It is against the law for employers to pay workers less than the National Minimum Wage or to falsify payment records. A worker can make a complaint to HMRC who will investigate the complaint. If HMRC find that an employer hasn't paid at least the National Minimum Wage, they can send a notice of arrears plus a penalty for not paying the correct rate of pay to the worker.

Since the introduction of the National Living Wage the penalty for non-payment will be 200 per cent of the amount owed, unless the arrears are paid within 14 days. The maximum fine for non-payment will be £20,000 per worker. However, employers who fail to pay will be banned from being a company director for up to 15 years.

It is important to ensure you calculate the right rates to pay your workers and you need to know that the government includes time spent:

• at work and required to be working

• not working because of a machine breakdown, but kept at the workplace

• waiting to collect goods, meet someone for work or start a job

• travelling in connection with work

• training or travelling to training

• at work and under certain work-related responsibilities

What's not included:

• travelling between home and work

• away from work on rest breaks, holidays, sick leave or maternity leave

• on industrial action

• not working but at the workplace or available for work.

Boosting the economy of your employees has several benefits. A higher minimum wage can improve your employee morale and productivity, which will consequently improve your staff turnover rate.

On the other hand, paying a higher salary will have a positive impact on your brand reputation, helping you to attract professionals looking for long-term business relationships.

:: Malachy McLernon (m.mclernon@pkffpm.com) is a director of PKF-FPM (pkffpm.com). The advice in this column is specific to the facts surrounding the question posed. Neither the Irish News nor contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.

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