From April 2016, a new mandatory National Living Wage (NLW) for workers aged 25 and above is set to be introduced. The NLW will initially be set at £7.20 – an increase of 50p to the current National Minimum Wage (NMW), which equates to a £910 increase in earnings per annum for a full-time worker currently on the NMW (£6.70 per hour).
A report released by the Regulatory Policy Committee (RPC), the independent public body that provides the Government with external scrutiny on new proposals, has found that the Government’s plans to increase hourly wages for low-paid workers is set to cost businesses approximately £1.1 billion. This figure includes almost £700 million in direct costs to employers increasing wages to meet the new statutory minimum and an expected cost of £137.5 million in non-wage labour costs such as National Insurance payments and pension contributions.
In response to the figures, the RPC has urged the Government to reduce red tape to help companies cope with the estimated rise in costs. It is hoped that a reduction to corporation tax and fewer regulatory hurdles would assist businesses with the increased costs that will be incurred. The RPC’s report does not however consider the additional costs that may be incurred by British businesses if George Osborne’s plans to increase the NLW to £9.00 per hour by 2020 come to fruition.
Should you or your business require any further guidance or assistance regarding the introduction of the National Living Wage (NLW) for workers aged 25 and over then please contact us on 0161 672 1425.