Increase of the National Minimum Wage !
Did you know that in April 2019, not only MTD will come into force, but the national minimum wage will increase ?
This means that the National Living Wage will increase by 4.9%, from £7.83 to £8.21 an hour for employees aged 25 years old and over.
Have a look below to see the different increases as the hourly rate depends on your age and whether you are an apprentice.
The salary of an apprentice is variable depending of different factors.
Apprentices are entitled to the apprentice rate if they’re either:
Aged under 19
Aged 19 and over and in first year of the apprenticeship
Apprentices are entitled to the minimum wage for their age if they both:
are aged 19 or over
have completed the first year of their apprenticeship
Difference between National Living Wage and the Living Wage
The National Living Wage is set by the government and the Living Wage is set by the Living Wage Foundation.
As opposed to the government way of calculating the hourly wage based on age, the Living Wage Foundation has based its calculation on the cost of living. It has stated that the national rate should be £9 nationally and £10.55 in London. As the calculations are based on the cost of living, the same wage applies to all workers over 18.
It is mandatory for employers to pay their employees the national minimum wage that corresponds with their age. However, it is voluntary to pay their employees the Living Wage. According to the website of the Living Wage Foundation, over 4700 employers are accredited by the Foundation, meaning that over 4700 companies have volunteered to pay their employees the Living Wage (£9 and £10.55). You can see if your company or a company you would like to work for is part of the program by clicking here.
How much should you pay your employees ?
This is a question that all business owners will ask themselves at some point.
There are no magic formula, but different factors can influence the decision.
The main points to remember when you have to establish how much to pay your employees are:
What is the market offering ?
What value will this new position/employee bring to your business ?
What would the prospect employee expect to receive for their work ?
What can you afford to pay ?
When you will have answers to these 4 questions, you will then be able to decide how much you should pay your employees. Xero has written a great article about how much you should pay your employees, click here to read it and learn more.
Our business advisory service is perfect to help you answer these 4 questions. We will have a look at your finances and your needs and help you to align your goals with your finances. Don’t forget that retaining staff is less expensive than hiring and training new employees.