For this policy to be sustainable, government must offset these costs by reducing others."
The Federation of Small Businesses (FSB) echoed this sentiment and warned that the increase to the minimum wage could lead to lower recruitment rates, increased redundancies and the shelving of investment plans. Craig Beaumont, the organisation’s directors of external affairs and advocacy, commented: "There's always a danger of being self-defeating in this space. Wage increases aren't much good to workers if prices rise, jobs are lost and there's no impact on productivity because employers are forced to cut back on investing in tech, training and equipment." Mr. Beaumont also referred to the 1.7% increase in business rates that will come into effect from April 2020, which he said could, combined with the increase to the minimum wage, have a substantial effect on businesses, particularly those that are smaller in size. An independent report , conducted by Professor Arindrajit Drube, which investigated the impacts of minimum wages around the globe and how this could translate to UK policy should work to allay some of the fears prompted by the increases to minimum wage rates, as it found that there was little to no evidence of job losses as a result of rising minimum wage levels. He welcomed the prospect of “exploring a more ambitious national living wage” but asserted that the Low Pay Commission should have the power to review the effect of pay increases in relation to jobs, so that any uplifts that start having detrimental effects can be reconsidered. The Low Pay Commission recommended that workers aged 21 and over should be entitled to the national living wage. It is the government’s intention that this will be achieved by 2024, in line with when the national living wage will be set at £10.50 per hour.
Frances O’Grady, general secretary of the Trades Union Congress, has argued that workers need a national living wage above £10 per hour now and not four years in the future. She stated:
"This is a long-planned raise, but it's also long overdue. Workers are still not getting a fair share of the wealth they create. And in-work poverty is soaring as millions of families struggle to make ends meet,"
There is a separate, non-mandatory wage level, calculated by The Living Wage Foundation, which it describes as a fair level of pay, and a figure that is a true reflection of the cost of living. This is currently set at £9.30, with a higher amount of £10.75 for employees based in London. Approximately 6,000 UK businesses pay this “real living wage” and are accredited Living Wage employers.
CIPP comment
Paying the National Minimum Wage and National Living Wage is a legal requirement for businesses, and it is crucial that employers and payroll departments are getting it right. The CIPP recognises this and offers a comprehensive day long course which explores what the rates are, who they apply to and also looks at the payments and deductions to include and exclude from calculations, to ensure compliance. The next course takes place on 22 January 2020 in Manchester and you can enrol here.
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A cautionary note surrounding the leap year and National Minimum Wage / National Living Wage 6 January 2020 2020 is a leap year, which means that instead of the standard 365 days in the year being observed, there will be 366 as there is an additional day in February – the 29 th . For many, this will have absolutely no impact on their pay whatsoever, but employers are being urged to exercise caution in certain scenarios.
For a large number of salaried employees, they will work the additional day and see no effect on their pay but, where their hourly rate is close to or sits at the National Minimum Wage (NMW) or National Living Wage (NLW), businesses
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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