By Kevin Fitzgerald, UK Managing Director at Employment Hero
Next month, UK businesses will face the largest shake-up in employment for years.
The Government’s reforms are not new. However, they represent a fundamental change in the way businesses approach everything from payrolls to probationary periods. These changes require SME managers and owners to rethink their approach to managing their workforce.
The following are the major changes that will be coming into effect in April
For workers over 21, the national minimum wage will rise from PS11.44 per hour to PS12.21.
Minimum wage for workers between 18 and 20 years old will rise to PS10 an hour
The employer National Insurance Contributions will rise from 13.8% to 15 % and the threshold for payment will be reduced from 9,100 PS to 5,000 PS.
The statutory sick pay rate will rise from PS116.75 per week to PS118.75.
The statutory maternity pay will rise from PS184.03 per week to PS187.18.
The statutory paternity, adoption, shared parental, and parental bereavement pays will also increase from PS187.18 to PS187.18 a week.
Retail, Hospitality and Leisure Business Rates Relief Scheme provides eligible, occupied retail, hospitality and recreational properties with a relief of 40%, up to an annual cash cap limit. This is limited to PS110,000 for each business. The previous relief rate, which was 75% with the same cap on cash, is no longer available.
The biggest impact will come from the changes to National Insurance for most businesses. Our payroll and employment platform, which includes 90,000 UK workers, calculated that an SME with a median wage of PS35.600 per full-time employee would pay an additional PS78 a monthly, or PS932 a yearly, with a NIC bill totaling around PS4,590 for each employee.
The wage increases are a problem for industries like hospitality, retail, and care where labour costs make up a significant portion of the operating costs. Businesses that rely on young workers in the hospitality and retail sectors will be affected. A cafe that employs ten young people aged 18-20 who work 20 hours per week would have to increase their wages by PS3,360.
What are the options for relief?
The Employment Allowance has been significantly improved by the government. It allows you to offset a certain percentage of your NIC liabilities as an employer.
The change from PS5,000 up to PS10500 and the removal of the PS100,000.0 eligibility cap means that even the smallest businesses could offset their entire NIC liabilities – while many other companies can write off as much as PS10500. This is not a major change for a company with 20 employees who are facing a PS100,000.000 liability. But it’s something. Early claim is important to maximize its benefits.
You can offset wage increases by doing these 5 things.
Make sure your payroll system is ready for the changes.
It is not enough to update your software to reflect the new rates and thresholds. You also need to review how you plan and budget for your workforce. Assessing your payroll structure is the best way to keep up with rising employer contributions while maintaining a steady cash flow. This is where a cloud-based software solution could be a lifesaver.
Review your staffing model
Plan for both the short-term and the long-term by looking at your current staffing level. You should review your full-time, contract and part-time employee mix and make any necessary adjustments to maintain profitability. Talk to your employees about switching over to a more flexible schedule. This is also an excellent benefit for employees that want to work different hours.
Examine your technology and AI usage
Implementing new systems and procedures can make your team more productive. This will not only help you keep your recruitment costs down, but it will also give you the opportunity to provide a better balance between work and life for your employees, resulting in less stress and burnout.
Negotiate with suppliers
Examine all your existing contracts and partnerships and see if there are ways to reduce your costs and change the scope of your work. If you find this difficult, it may be necessary to increase your fees and contract terms. Ask your employees for their opinions on cost-saving initiatives. After all, a problem that is shared can be halved.
Employee Rewards and Recognition
It may be difficult to increase pay and give bonuses for a while. Now is the time to consider other ways to reward and recognize employees, like salary sacrifice schemes, additional holiday days, working from home more often to reduce commuting expenses, and Apps which offer benefits to employees for their health and well-being goals.
To navigate successfully in the future, you will need more than technical compliance. SME’s need to consider their cost structures and employment practices holistically, and how they might impact their recruitment strategies, competitiveness and overall business model.
Remember that there is support available if you feel overwhelmed by the changes. You can get help from professional advisors, government resources and industry associations. Employment Hero, an employment and payroll program that is reliable and easy to use, will help you stay up-to-date with new employment laws and rates.
The original version of this article How you can offset the increase in April’s employment costs and business tax appeared first on Human Resources News.
