Employers have been warned to prepare for the introduction of the national living wage or face being “named and shamed” by the government.
The living wage is due to kick in a rate of £7.20 an hour for workers aged 25 and above from April – rising to £9 by 2020 – and the onus will be on firms to show they are complying with the rules.
Law firm MacRoberts said that salary, bonuses and incentive payments are included when calculating the wage, but the use of a company vehicle, provision of uniform, expenses and tips are not – so employers of all sizes will be expected to keep detailed records.
Katy Wedderburn, a partner and specialist in employment law at MacRoberts, said: “Many small companies might not realise that the changes in the law will affect them. They may have to revise their processes so they have sufficiently detailed records and information available for inspection.
“Companies have also been ‘named and shamed’ in the past for failing to comply with minimum wage regulations following the introduction of a naming regime in 2013.”
Analysis from the Resolution Foundation think tank found that around one in five employees in small firms are set to get a pay rise as a result of the new national living wage, but the move has sparked concerns over job creating, pricing and investment.
Whitbread, the owner of coffee chain Costa and hotels operator Premier Inn, last year said it faces extra annual costs of up to £20 million as a result of the wage, announced by Chancellor George Osborne in July.
Wedderburn added: “Business owners should prepare now, as there could be a major impact on their profits. In the worst case, some redundancies or reorganisation may be needed to cover the costs of the new national living wage.”