Here at the HR Consultants, we have been considering the impact of the National Minimum Wage and National Living Wage increases on SMEs and how leaders could lean in to consider their business models and people plans to lift their thinking into longer-term strategy
With the imminent statutory National Minimum Wage (NMW) and National Living Wage (NLW) increases on 1st April 2023, understandably, many businesses will be focused on the immediate cost implications on bottom line profitability. Significantly, NLW increases attribute an additional £1,600 to the annual earnings of a full-time employee and are expected to benefit over two million people. This additional income will undoubtedly be welcomed by employees across the UK, struggling with the soaring costs of living. With inflation and a cost of living crisis backdrop, off-setting these costs and implementing price increases on your customers may form part of your approach.
People Documentation
Firstly, as an employer, to ensure you are fully prepared for the rate increases for both new starters and current employees, changes to your employees’ terms and conditions and in this case, related to their remuneration, should form part of a review of your contracts of employment, employee handbook and associated policies. Ensuring your people documentation is on point, protects you and your employees and ensures you are robustly compliant. We can prepare all relevant documentation or review your existing documents with our people documentation packages below;
Communicate with trust, transparency and tenacity
If you are implementing NMW and NLW pay increases then tell your employees all about it, how it directly and positively impacts them, and how this will be reflected in their payroll. This will ensure employee awareness and understanding of the changes. Consultation with your team members outside of the scope of these statutory pay increases is also fundamental, so that no-one feels overlooked or undervalued. This approach feeds into financial wellbeing for everyone you employ.
Positive Financial Wellbeing
When did you last check in on your team’s financial wellbeing? Reviewing job families and salary bandings, compared with your industry competitors should form part of your housekeeping. With pay rises on the agenda, this creates an opportunity to consider salary benchmarking across your business and to assess pay against your industry sector, company size and location.The demand for talent remains high and employees are driving the market right now, setting yourself apart from your competitors is essential for your talent management pipeline and retention.
Employee Benefits – Engage, motivate, retain
The good news is – the benefits of pay increases, such as the NMW and NLW, as well as salary benchmarking uplifts correlate with enhanced engagement and productivity levels. However, let’s go one level further here – HR themes inform us that employees are re-evaluating post-Covid, are proactively seeking to be part of an organization with a strong employer brand, offering a sense of purpose and a contribution effect from work. In considering the NMW and NLW increases and your remuneration packages, it makes sense to explore your employee benefits in their entirety. If you are not able to implement financial rewards currently, for those outside of the scope of the statutory pay increases, then exploring non-financial employee benefits is certainly worthwhile. Understanding what really matters to your people from a benefits package perspective will enable you to consider a range of employee benefits. Salary sacrifice schemes can be a great way to offer additional employee benefits without increasing the employer’s costs. By allowing employees to sacrifice part of their salary in exchange for certain benefits, such as cycle to work schemes, childcare vouchers, company car or private medical, employers can offer attractive benefits that can help attract and retain talented staff.
We offer comprehensive support to employers by carrying out a gap analysis to ensure regulatory compliance and we offer extensive salary benchmarking, role profiling, remuneration and reward strategy advice and guidance.