National Living Wage - are you ready?

Well, curiosity finally got the better of me and I decided to see whether I would reduce my shopping bill drastically by shopping at Lidl - the 1st British Supermarket to pay the National Living Wage (NLW). The second aim of this ‘research trip’, was to see whether paying the living wage was having any noticeable effect on the shopping experience customers have. I’m sad to report that the only employee I came across in the store was at the check-out and it didn’t seem that receiving the living wage was having any positive impact on her customer service skills!

The national minimum wage increased to £6.70 (for over 21 yr olds) on the 1st October, and employers who have employees over the age of 25, on the minimum wage, will face another increase to their wage bill from April 2016, when the NLW is introduced. The NLW will be £7.20/hr, but the current minimum wage rate will continue to apply to those under 25. Employees who qualify for the NLW will take home £1,200 more a year (and you’ll be paying that increase plus on-costs).

If you are affected by this you’ve probably already calculated how many of your employees are affected and how much this is going to cost your business. Perhaps it’s not going to have a big impact, but if it is, you may be considering whether you can afford it and looking at your options. You may want to look for ways you can increase productivity to help pay for the increased cost, or perhaps how you can keep your wage bill at the same level by reducing staff numbers, hours or benefits. This may be a good time to consider whether apprenticeships could work for you. Just remember, if you’re reducing staff numbers, hours or other benefits there are legal steps to follow. Any changes to terms and conditions need to be agreed by you and your employee (or you’ll have to consider more risky action). It’s worth getting advice to ensure you get it right and things go as smoothly as possible.

All that said, I think my trip to Lidl highlighted that earning a living wage does not necessarily motivate employees to give of their best! We’ll leave the fascinating topic of ‘motivation’ for a future blog. Perhaps, that’s what Lidl needs to work on next.....

Useful Links:

*https://www.gov.uk/national-minimum-wage-rates

*https://www.gov.uk/government/publications/national-living-wage-nlw/national-living-wage-nlw

*http://www.reed.co.uk/average-salary

If you’d like to discuss any of the issues raised in this blog or any area of people management, please contact Natalie at New Forest HR on 07802 626128 or email:natalie@newforesthr.co.uk.