Have Your Staff Had A Pay Rise This Month?

Don’t forget that the National Minimum Wage rates increased on the 1st of April.

For those of us working in the membership and association sector, we have a proud reputation of valuing our staff. While we cannot traditionally match the large corporate salaries, our membership body is generally supportive of a fair rate of pay.

If you have always set your rates above NMW, there is a real risk that the recent large increases will have rapidly closed the gap. I was certainly shocked when I saw the figures and realised that my entry level salary, previously comfortably above NMW, was suddenly very close to it.

It is a legal requirement that you must pay staff at least the NMW, but predictions are that this will catch out some well-intentioned employers whose rates, even a couple of years ago, were well above the statutory minimum.

You may also want to benchmark salaries against the Real Living Wage. Thousands of small to medium sized businesses in the UK currently volunteer to go beyond the Government set NMW and pay salaries in line with the current cost of living, which is calculated by the Living Wage Foundation every year.

Following the UKs inflation rate peaking at its 41-year high at the end of 2022, the Real Living Wage now stands at £10.90p/h, compared to £9.90p/h last year. This takes the equivalent full-time annual salary from £19,305 to £21,255.

  Government National Minimum Wage 
 Real Living WageNational Living Wage21-2218-20U18NMW Annual IncreaseRLW Annual Increase
        
2023£10.90£10.42£10.18£7.49£5.280.92£1.00
2022£9.90£9.50£9.18£6.83£4.810.59£0.40
2021£9.50£8.91£8.36£6.56£4.620.19£0.20
2020£9.30£8.72£8.20£6.45£4.550.51£0.30
2019£9.00£8.21£7.70£6.15£4.350.38£0.25
2018£8.75£7.83£7.38£5.90£4.200.78£0.30
2017£8.45£7.50£7.05£5.60£4.05  

If inflation has brought your current salaries close to NMW rates you need to be aware that some deductions from pay could push your employee’s hourly rate below the threshold.

In sectors where it is common to make deductions for items like uniforms or tools the issue should be easy to avoid but there are some less obvious deductions which can affect staff in our sector.

Unpaid overtime before or after shifts caused a big problem for Sports Direct in 2015. The retailer had a policy of searching staff as they left the building, effectively lengthening their working day and thus reducing the average hourly rate of pay.

Problems may also be caused by beneficial salary sacrifice schemes, such as private pension contributions, healthcare schemes or even the cycle to work scheme. Even one-off deductions can land employers in hot water if it reduces pay below NMW rates in the pay reference period. This could apply to such diverse examples as a lump sum pension payment, or even some legitimate deductions from wages at the end of employment.

It’s important to familiarise yourself with the wage changes and keep an eye on how any deductions might affect your employees. Failure to adhere to this, even if accidental, may lead to criminal proceedings and a fine of up to £20,000, plus £100 per underpaid employee. Always seek professional advice if you are unsure.

Even if you are confident that your salaries comply with the NMW legislation, it is worth considering whether you can offer a pay rise to your staff to help alleviate the strain caused by the cost-of-living crisis. Since February 2022 domestic gas prices have increased by 129%, electricity by 67% and food by 18%, which is a 45-year high.

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