Keeping up with the demands of the national living wage
In April the national living wage was increased to £7.20 for all employees over the age of 25. Whilst workers welcomed the changes, it has placed additional pressure on businesses that have seen their outgoings increase as a result.
When costs need to be cut, the immediate reaction is often to make some staff members redundant or to halt hiring new employees. This can have an adverse impact on your business and operations, particularly in certain sectors where staff can’t not be replaced without impacting business activities, such as homecare or cleaning. Firms that rely on lower paid labour are also among the businesses most affected.
In response to the new national minimum living wage, many employers are cutting back on perks. Benefits such as paid breaks, Sunday pay, bonuses and providing free food are now being withdrawn by companies that are seeking to make cost savings in other areas.
Switching employees to more flexible contacts is also an option that some businesses are looking into. Ensuring that employees only work when you need them to, rather than have a fixed number of hours each week, can help reduce outgoings especially if the amount of work you have fluctuates depending on demand. This means that, for instance, if you are a homecare company you can reflect the number of customers you have in the workforce that is working at any given time.
Using a timekeeping service is one way to manage members of staff and cut costs. If your business has members of staff working remotely, using IQ:timecard can ensure you are only paying employees for the time that they are actually working. The timekeeping software also gives managers access to accurate and easy to read data digitally, freeing up their time to work on other areas and reducing the need the need to print out information, cutting outgoings further.
After the national living wage was increased many businesses, including large firms, reduced wage outgoings by reducing overtime pay and incentives for antisocial hours. Some companies, for example, paid employees double their typical wage to work on Sundays, Bank Holidays or to do additional hours but are not cutting this incentive down to one-and-a-half times the usual hourly rate.
While the rise in the national minimum wage does present a challenge to businesses, particularly smaller firms, it doesn’t mean they have to cut the number of people they employ.