2 August 2023
The National Minimum Wage: Make sure you're really paying your way
Just because you’re certain that you’re paying every employee at least the legal minimum doesn’t mean you actually are. There are a number of factors at play that can cause you to underpay your employees.
Any company can make this mistake, so let’s unpack why this matters, why it happens, and how MHR can offer you the tools to fix it.
The Cost of Living and the cost of doing business
The cost-of-living crisis has thrown a lot of day-to-day issues facing employees into focus. In particular, the importance of financial wellbeing has become a huge concern for everyone.
Retail employees, who are often reliant on shift work, zero hours contracts and lacking job security are particularly vulnerable to financial wellbeing issues. It’s therefore critical that you do everything you can to support them financially.
Financial wellbeing is one of the biggest concerns for employees in the current market. Around 47% of employees ranked it as their second most important wellbeing concern (only beaten by emotional wellbeing). More than half feel that their employers aren’t doing enough in this area.
If you want your employees to be as productive as possible, you’ll have to make sure they feel comfortable and supported at work. Supporting financial wellbeing doesn’t mean you need to give everyone constant raises, but it does mean you need to offer pay transparency, bonuses where appropriate, and minimise the risk of payroll mistakes leading to late or incorrect pay.
The National Minimum Wage
Nobody wants to pay their employees less than they’ve earned, but errors can creep in without anyone realising, even the employee themself! Salary sacrifice schemes are a particular issue, as they can cause an employee’s take-home wage to drop below the minimum wage.
Payroll mistakes are another big issue that can cause an employee to be short-changed. In cases where an employee is paid on a shift-by-shift basis, it can be really easy for a few small errors to quickly add up, without anyone spotting the issue.
Shifting legislation can also catch a business out. The national minimum wage frequently changes, and in different increments for different kinds of employees. Someone over the age of 23, for instance, will earn more than a 19-year-old for example. If your pay data is stuck in a silo, or needs to be manually updated, it can be easy to miss out updating the pay rates in a key database.
In addition to harming employee wellbeing, there’s a greater risk to your business. Employers that underpay their employees are at risk of massive fines from HMRC, as well as some very uncomfortable articles in the papers naming and shaming them for their mistakes. That causes harm to your employer brand that could stick for years to come.
Your ace in the hole
If you want to make sure you never have to stress about the national minimum wage again, then iTrent has a function built for you. The national minimum wage calculator ensures your employees will never fall through the net. You’ll be notified if anyone has dipped below the threshold, so you’ll have complete visibility.
Want to learn more? Check out our guide to how iTrent delivers value by making the complex simple.