Catering Scotland

The arrival earlier this month of the new national living wage (NLW) has become, for many operators, the defining challenge of the coming months. Not since the introduction of the national minimum wage back in 1998 has a new payroll-related law caused such chatter and trepidation throughout an entire sector. And whether you agree or deny it’s a good idea, the fact is it’s here to stay.

Michael McAllister reports on the introduction of the most talked about payroll development for two decades…

The facts are simple enough to grasp: For employees aged 25 or over and not in the first year of an apprenticeship, everyone is now legally entitled to at least £7.20 per hour, and the Government is committed to increasing this every year from now on. By 2020, it’ll be more than £9.00 per hour.

However, if you’re an employer, you could be forgiven for looking at it a bit differently. These changes represent among the most significant (and expensive) investments you’ll make to your business for years.

HM Revenue and Customs (HMRC) officers have the right to carry out checks at any time and request the presentation of payment records. Unsurprisingly, they may also investigate employers if a worker should make a complaint, and if they find that an employer hasn’t been paying the correct rates, not only will arrears have to be settled immediately but a penalty may also be due.

Worse still, offending organisations could be publicly named and shamed.

With all this in mind, it’s clear that it’s the employer’s responsibility to keep records proving they are paying the NLW. Thankfully, most already use their payroll history as proof they are paying the minimum wage, where required, but regardless, all records must be kept for at least three years.

For thousands of employees across the UK on the other hand, the national living wage is very much a step in the right direction. Having suffered for years while inflation increases prices yet wages remain stagnant, many people are having trouble affording life’s simple basics. With that in mind, the announcement of a meaningful, Government-sanctioned rise in wages to a level which is more representative of today’s actual living costs, is to be welcomed; unless, of course, your business operates in the hospitality, catering or tourism sectors, in which case you may already be wondering how you will cope.

Whether you support the move or not, the sad fact is that some operators simply won’t be able to afford to pay the new rates and will have to either lay staff off, decrease spending in other areas or, in extreme cases, even close their doors for good.

However, there is an upside to all this. With extra money in their pockets, many lower paid workers will begin to find themselves with an increased level of disposable income, some of which will no doubt work its way into the hospitality and leisure sectors. Given that operators will be forking out considerably more in wages every month because of the changes, it’s heartening to think that some of this pain will be mitigated by increased takings at the tills.

Michael McAllister is Payroll Supervisor Scotland at Mazars LLP.

For more information on how Mazars can assist hospitality and catering operators with accountancy and payroll services, click on the image above.

THIS ARTICLE HAS BEEN EDITED FROM ITS ORIGINAL VERSION IN THE 2016 CATERING SCOTLAND YEARBOOK. TO ORDER YOUR COPY, EMAIL YEARBOOK@CATERINGSCOTLAND.COM. COPIES COST £4.99 +P&P, AND DISCOUNTS ARE AVAILABLE FOR TEN OR MORE.