Here at Yorkshire Accountancy we are often asked questions. We pride ourselves on being there for our clients, and answering queries is just one of the ways we can do this.
Q: What is the living wage, and do I have to provide it?
A: The National Living Wage is currently a voluntary hourly rate, and is calculated by being linked to the cost of living in the UK. However, as of 1st April 2016, this will no longer be voluntary, and will instead by compulsory for every business in the UK. Employees aged 25 or over who is not currently in the first year of an apprenticeship will have to be paid at least the National Living Wage (£7.20 an hour). Any employee under 25 will need to be paid the National Minimum Wage (£6.70 for anyone 21 or over, £5.30 for those aged 18 to 20, £3.87 for those under 18, and £3.30 for apprentices).
If the minimum wages are not adhered to, employers could see fines, prosecution, and even find themselves being called out publicly. Figures normally increase every October, so it is also worth remembering that you as an employer will need to raise your employees’ salaries in line with the changes every year (or as often as they occur).
Fines for non-payment of the correct wages could be as much as £20,000 per worker, and employers could even be banned from being a company director for as much as 15 years. Clearly, the National Living Wage is an important new step for everyone involved.
Q: I use zero hour contracts at my restaurant, but some of my employees feel they should be on employee contracts because of the number of hours they are working. Should they?
A: Zero hour contracts – a contract in which the employer does not guarantee any hours, and the employee does not have to work the ones that are offered – have a number of pros and cons. The main thing that people like about them is that they offer a huge amount of flexibility, and neither the employee nor the employer will be penalised in any way if there is either no work, or if the work offered doesn’t suit due to other commitments, for example. The main problem with them is almost the same as the main advantage; sometimes there is no work, and no obligation by the employer to pay the person who is on a zero hour contract.
A zero hour contract is designed to be a casual arrangement, and is ideal in industries that have peaks and troughs (catering is one example). So if a worker regularly works the same hours, the same shift if you like, a zero hour contract may not be suitable; if there is always work for them, and they are assured of their hours, then a regular hour contract would be better. If an employee is on the wrong contract there could be a case in a tribunal should anything go wrong.