From April 2020, minimum wage workers will benefit from a healthy pay rise which will take workers aged 21-24 from £7.70 to £8.20 and 24+ from £8.21 to £8.72. This sounds great but what are the negatives? Smaller companies may struggle to adhere to these new pay scales. Companies using low skill labour will most likely be paying minimum wage. Having this unwanted increase will mean money originally used for other reasons for example training and investments will be reduced.
In the past, we have seen companies recruiting less as they can’t afford to pay higher wages. This can put a strain on current employees who may be overworked. These tough economic conditions can also lead to redundancies if a company is really struggling. This can be concerning for these types of employers who do not want to let staff go but may not have any other choice.
Source – www.personneltoday.com
There are some changes we can expect to see for smaller companies trying to tighten the belt. Although employees will benefit from a pay rise, there can be some direct negatives.
Insurances, internal childcare/childcare vouchers, staff canteens and paid lunch breaks can all take a hit in hard financial times. To make way for higher staff wages these benefits may be reduced which will more than likely aggravate employees. A stricter clocking in and out procedure will ensure staff are paid more accurately and overtime rates are not taken advantage of. Although these types of benefits are more commonly seen in larger companies – this doesn’t mean these large companies will not try to recover the increased salary cost from elsewhere.
Less Overtime Available
Part time workers usually have the opportunity to make more money by agreeing to do overtime regularly. This can help finances at home by bringing in a fulltime wage instead. Overtime isn’t guaranteed and therefore management are under no obligation to offer these hours. This can be ‘make or break’ for some employees as they rely on the extra income. Employees may wish to look elsewhere if they are unable to live on their original basic wage.
What can we do to help?
Whilst it is up to the government to decide the national wage scales, a company can do their best to keep employees informed at all times. This is done by holding meetings and sending out letters. If a company decides to reduce hours that are usually available or change the clocking in procedure this should all be done in good time and the staff are given a chance to ask questions or request any adjustments that may need to be made.
If you need any advice regarding the impeding pay rise and the effects it may have on your company, please give our friendly consultants a call on 01206 700 690 or email firstname.lastname@example.org