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Employment Update for Small Businesses
April 2023

Dear Subscriber

As we enter a new financial year, many employers are struggling with the combined financial hit of price rises for utilities, goods and raw materials, combined with the huge rise in the National Minimum Wage and National Living Wage – the latter has just jumped by almost 10%.  See below for details of the increases.

This month we consider what employers can do to manage this financial pressure.

Please contact me if you would like to find out a bit more about any of the subjects raised in this update or if you need any help or advice.

Please forward this email to any of your contacts who might find it of benefit.

Regards
Peter Etherington
Tel: 01664 668164
www.etherington.co.uk

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Peter Etherington
A Response to Cost Increases
How to control staffing costs
I am afraid I do not have a magic wand but there are some actions you can consider in an effort to manage your staffing costs:

Restructure

Now is a good time to take a good hard look at your structure to see if it can be trimmed at all. If you have grown over the last few years it may well be that you have over-staffed in some areas in anticipation of further growth. If that is the case, it may be a good idea to scrutinise the effectiveness of the current structure by focussing on outputs. Do you need as many managers, for instance? Would it make sense to combine certain roles?

A good exercise is to start with a blank piece of paper and pretend you have no staff at all. You can then draw up a structure that best suits what the organisation needs, being really honest with yourself, which you can then compare with what is actually in place.

Reduce the wage bill

If you are able to reduce your staffing level, the next step is to consider how that can be achieved. It may be that you can reduce the amount of overtime staff are working, if you put an overtime ban in place and ensure staff are working effectively during their contracted hours (see below under Manage Performance).

Having an open consultation with your staff can sometimes be useful. You may tease out those who would really like to reduce their hours, or the older staff members who are thinking about retirement.

Ban Recruitment

A recruitment ban can be a sensible step to ensure that when someone leaves they are not automatically replaced. You have the opportunity to consider carefully whether you need to replace like for like, or at all. Maybe the duties of the leaver can be shared out among existing staff or carried out on a part-time basis.

Manage Performance

You want to make sure that you are getting full value for money from your staff, so it is important to manage performance effectively. If you don’t already have an appraisal process in place, now may be the time to introduce one. That would allow you to set meaningful objectives for staff to best meet the needs of the business against which you can measure their performance. You can them move quickly to tackle any underperformance.

Redundancy

Nobody wants to make redundancies, but sometimes it is a necessary evil. If you can manage with fewer staff (see Restructure, above), it is important that you plan effectively and follow a fair redundancy process. A good starting point is to look at our guidance on redundancy.

Please contact us if you would like any advice on these topics.

National Minimum and Living Wage
From 1st April 2023, the minimum wage bands increased:

  • to £10.42 per hour (from £9.50) for workers aged 23 and over
  • to £10.18 per hour (from £9.18) for workers aged 21 to 22
  • to £7.49 per hour (from £6.83) for workers aged 18 to 20
  • to £5.28 per hour (from £4.81) for workers aged 16 and 17
  • to £5.28 per hour (from £4.81) for apprentices under 19 and those over 19 in their first year*

*N.B. Apprentices over 19 and who have completed at least one year are entitled to the appropriate rate for their age.

www.etherington.co.uk